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Last Updated : Jul 10, 2019 08:10 PM IST | Source:

Indian cos may spend big on capex to step up regulatory compliance, says Ind-Ra

The credit rating firm said it expects near doubling of research and development investments as Indian companies launch complex generics, specialty and biosimilar drugs

India Ratings and Research (Ind-Ra) expects Indian drug companies to spend a higher proportion on capex to upgrade infrastructure and step up regulatory compliance between FY20-30.

This would help as the pharmaceutical companies target the US market for the next level of growth.

The credit rating firm said it also expects near doubling of research and development (R&D) investments as Indian companies launch complex generics, specialty and biosimilar drugs.


"As the operating environment in the US market has undergone a shift in the wake of rising competition and increasing customer buying power, product quality and uninterrupted supply has become focus points for commercial success," said Ind-Ra, in its latest report.

"This translates to a robust approach to regulatory compliance for manufacturing facilities," the report added.

The report said from H2FY17, the industry witnessed the resolution of key manufacturing facilities of large manufacturers under warning letters and import alerts within an average period of 24-36 months after regulatory restriction.

"While this is encouraging, a reduction in resolution times and limited repeat observations would indicate regulatory discipline returning to the industry," Ind-Ra said.

The report said input quality risk stemming from high dependence on Chinese players has been an emerging concern in FY18-19, leading to product recalls initiated by major players.

Ind-Ra said securing the supply chain is likely to emerge as a top priority as several complex generics and an innovative pipeline will hit the markets in the next decade.

"The credit profiles and return ratios of Indian players with regulatory deviations have been adversely impacted, attributed to remediation cost and restricted market presence," Ind-Ra said.

"Indian pharmaceutical companies need to step up their regulatory compliance to secure impeccable reputation as reliable suppliers and provide the targeted return on the ongoing and planned research and development and capital investments over the next decade," Ankit Bhembre, Senior Analyst, Corporate Ratings at Ind-Ra said.

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First Published on Jul 10, 2019 08:10 pm
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