US healthcare Bill: Gains for Indian pharma

The healthcare reform Bill proposed by US President Barack Obama is now a law as the Patient Protection and Affordable Care Act.

With the US market accounting for about half the global pharma sales, this may completely change the industry.

Big Pharma (top global innovator companies) will have to pay fresh taxes, but will gain a huge new market. Generic manufacturers, though losing out on the patent exclusivity battle for branded drugs, will gain from the reforms in the insurance market and easier regulatory procedures for bio-similars, according to analysts.

The Act has served 32 million new consumers in the world's most lucrative market by extending insurance coverage to a larger pool, covering 95 per cent of the American population. Direct new business for the industry from the newly-insured is estimated at $115 billion over the next 10 years.

That apart, "Copay reforms, elimination of lifetime caps, and enhanced coverage of preventative services can easily generate an even bigger boost in prescription utilisation than will come from the newly insured," says a pharma industry report by RPM.

For Indian generic manufacturers, benefits will stem from the omission of any ban on pay-for-delay settlements between innovators and generic manufacturers.

With drugs valued at over $100 billion set to lose patent exclusivity in the next five to six years (according to an Ambit report), generic manufacturers will continue to trawl the space for opportunities.

Opportunities will also stem from the clear support for generics as evinced in closing the 'donut hole' in Medicare part D (medical services plus prescription drug coverage plans) for senior citizens.

Ambit research points out that Glenmark, Lupin and Sun Pharma have maximum exposure in the US (sales percentage in the nine-month period ending December 2009), while Ranbaxy, Sun Pharma and Dr Reddy's lead the table in the number of abbreviated new drug applications.

With contributions from Puneet Wadhwa and Sunaina Vasudev