Indian Pharma Needs to Increase R&D Spend According to Report

S&P Global Ratings recently stated that Indian pharmaceutical companies need to increase their investment in research and development and quality of manufacturing in order to comply with global regulatory standards and compete on a global scale.

The report entitled ‘Indian Pharma Companies Need to Pass the Trials, But Can They Shape Up?’ said that pharma companies need to strengthen their systems and controls to successfully address regulatory matters.

The Indian pharmaceutical industry is the third largest in the world in terms of production and 14th in terms of value. It is mainly operated and controlled by foreign companies with subsidiaries in India, as labor has low production costs and there is a good availability of labour.

The industry has grown from USD 1 billion in 1990 to over 30 billion in 2015 and is expected to grow to 55 billion by 2020. Indian pharmaceuticals account for around 40 percent of generic drugs sold in the US.

President Trump’s “Buy American” campaign could heavily affect Indian pharma companies, who exported USD 6 billion worth of drugs to the US in 2015. Already, there has been a sudden decrease in US sales since the fourth quarter of 2017.

S&P Global Ratings analyst Vishal Kulkarni said that “We expect Indian drug makers to continue to push into complex, specialty drugs to negate margin pressures.” He added that new product opportunities in this sector are quite profitable and there is less competition.

Furthermore, the Indian government is focusing on lowering healthcare costs, which will benefit Indian companies by promoting the use of generics.

Tax benefits are available for Indian firms conducting research and development including an ongoing scheme by the Department of Scientific & Industrial Research (DSIR). If you have any questions about these incentives, please contact Swanson Reed R&D Tax Advisors to learn more.

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