With George W Bush back in the Oval Office, the Indian pharmaceutical industry hopes to continue its strong performance in the US.
During the US presidential campaign, Democratic presidential candidate John Kerry had looked more favourably disposed towards generic companies like Ranbaxy and Dr Reddy's.
The Democrats have traditionally been supportive of the generics industry, which makes cheap clones of drugs that go off patent. This helps bring down the cost of medical treatment. Though he had not made any promises about encouraging generic companies, Kerry had said the large promotional budgets of Big Pharma needed to be deployed elsewhere. In industry circles, this was seen as a clear signal that generic companies could look forward to a good time if Kerry came to power.
On the other hand, Big Pharma has always supported the Republicans. This time too it threw in its lot with Bush. So, will Bush return the favour by keeping generic companies out of the US, the world's largest market?
In all certainty, this is not likely to happen. "If the Democrats favour generic companies, the Republicans are worried about the rising cost of medication," said a Ranbaxy executive. The US government cannot ignore generic companies and their cheaper drugs if it wants to keep a lid on rising healthcare costs.
According to industry sources, the national health budget of the US for 2002-2012 is expected to be fully exhausted by 2009. Also, the cost of drugs and other pharmaceutical products, expected to touch 14 per cent of the total expenditure by 2012, is already at 12 per cent.
"Cheaper medicine is the need of the hour," Sanjeev Kaul, a management adviser, said.
"Bush's record shows that he believes in getting whatever is most competitive. This is good for Indians," added Davix Management Services director DS Brar.
Though Bush, unlike former US President Bill Clinton, did not vociferously campaign for cheaper medicines during his first tenure, he did nothing to keep generic companies away from the US.
Companies like Ranbaxy and Dr Reddy's have recorded impressive growth in the US in the last two years. In fact, strong US sales have helped Ranbaxy break into the ranks of the world's top generic companies. This has given Indian pharmaceutical companies reason to believe that their good run in the US will continue.
However, D G Shah of the Indian Pharmaceutical Alliance was of the view that Bush's reelection could indirectly impact the fortunes of Indian companies. He said big pharmaceutical companies would push their agenda for extension of patents to other countries with the US signing more free trade agreements. The extension of patents, called evergreening in pharmaceutical circles, could shut these markets for India.
"These companies are under attack in the US for charging high prices. The only way they can protect these prices is by raising prices elsewhere," he said.
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