US healthcare bill may bring big gains for formulation cos

MUMBAI: Indian drug makers could see runaway growth for the next 7-8 years bolstered by exports after the US Congress passed the
heavily-contested healthcare bill, and multinational firms may now be willing to put more money to buy into India’s formulations companies, said industry experts.

The bill that was passed on Sunday is the US government’s attempt to reduce healthcare costs and extend insurance coverage to nearly 35-40 million more Americans. “This would translate into huge opportunities,” said Glenn Saldanha, CEO & MD of Glenmark Pharmaceuticals. The bill promotes the use of generic drugs that are often one-tenth the price of the original version, but has the same impact.

While generics form only 19-20% of the US market today, they are likely to make up nearly 46-47% by 2013 when the bill will come into full effect, said Jay Shankar, chief economist at Religare Capital Markets. Add to that a 12-14% growth in India’s domestic formulations and the case to buy stocks of pharmaceutical companies gets compelling, a pharma analyst with a domestic brokerage said.

Read more, source: The Economic Times

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