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Indian Pharma Has Little To Offer On Job Creation

This story is a part of BusinessToday.In series on unemployment titled ‘Jobs – Reality Check’. Absence of reliable data has made unemployment a highly debated topic this election season. The series will try and answer some of the most prevalent questions related to the jobs scene in the country.

The Indian pharma is not the space to look at when discussing job creation in the country over the past four years. The sector, where the bulk of major players look to the US as the biggest market to drive revenues, is coping with its unique challenges in the market. A combination of multiple factors has contributed to the cost pressures faced by many leading players in the sector. These include channel consolidation (with fewer large wholesalers and chains sourcing generic drugs), which means they gain tremendous bargaining power that puts pressure on the pricing of drugs.

There is also the dimension of increased competition with new entrants joining in to tap the same market. In fact, many Indian companies are today competing with each other on the US soil. Then, there is also the component of regulatory overhang, with some of the companies being pulled up by the US drug regulator and import alerts being imposed impacting the future supply plans of some of the companies. Though some are getting over this as the import curbs are being lifted. There have also been disruptions in the domestic market, too, following the shift to the Goods and Services Tax (GST) but for the pharma sector, it is really the global pressures that have impacted the cost dynamics of its players, especially some of the leading players.

“The pharma sector, as a whole, is going through a period of consolidation after a long period of expansion-almost a decade of growth with many companies growing far beyond their original sizes,” says G V Prasad, co-chairman and CEO of Dr Reddy’s. – Business  Today

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