industry

Indian companies eye new trade channels in US amid erosion of generic prices


Indian drug makers struggling with trade channel consolidation and rapid erosion of generic drugs prices in the US, are exploring platforms such as Amazon, American billionaire Mark Cuban’s CostPlus Drug Company and other specialty and white-label e-pharmacies to sell generic medicines.

While these platforms are nascent and have limited scale at the moment, as they mostly sell out-of-pocket over-the-counter (OTC) medications and a limited portfolio of prescription drugs, executives at Indian companies see them as potential alternatives to heavily concentrated trade channel where three big buying consortiums, AmerisourceBergen, Cardinal Health, and McKesson Corporation, account for over 90% of the market, and have assumed greater bargaining power over suppliers to drive down prices and extract heft discounts on drugs.

“More and more channels will help and we will work with anyone that’s going to buy our products,” said Erez Israeli, CEO of Dr Reddy’s to ET.

Dr Reddy’s has begun tapping some of those platforms. While the company calls Amazon as its primary partner, it is also working with other e-commerce platforms such as Thirty Madison, Click Therapeutics, Truepill to sell over-the-counter (OTC) medications. Currently sales through e-commerce constitutes about 10% of its OTC business, but it is growing fast. In Q1, this channel grew in the range of 40-50%. Dr Reddy’s OTC sales was $150 million in FY22. It also started shipping about 10 prescription generics (Rx) products to Mark Cuban’s CostPlus Drug Company.

Launched in January, CostPlus Drug Company is an online D2C (direct-to-consumer) platform that sells about over 100 generic prescription drugs at cost plus a fixed 15% margin and $3 charge for labor. Cuban’s decision to get into pharmacy is to bring transparency and lower prices of generic drugs, a major concern in the US.

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Another drug maker

said there have been talks with these platforms. “I don’t think the mechanics of whether this will result in increased price erosion or less price erosion will arise, but these are options to the existing channel. which probably is in some way you know is more diversification of the channel, as against the concentration that we’ve seen in the past couple of years,” said Umang Vohra. MD & Global CEO.

Pranav Amin, MD of

echoes the same. “Historically there were 8 big buyers and then about 10-15 small buyers, everyone had enough share to get into, right now the buying groups are consolidated, the more buyers come it is better for the pharmaceutical industry,” Amin said.



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