Indian pharma investors think small as US compliance woes hit heavyweights
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MUMBAI: Investors in India's $15 billion pharmaceutical industry are favouring smaller firms with little or no exposure to the United States, where increasingly tight regulatory controls have burnt two of the country's biggest drugmakers over the past month.
Heavyweight generics makers, led by Sun Pharma and Dr Reddy's Laboratories, have long been seen as a conservative bet for domestic and foreign funds eyeing India, as these firms rely on the United States - the world's biggest pharmaceuticals market - for the bulk of their revenue.
But investors now say the prospects for these drugmakers are uncertain after the U.S. Food and Drug Administration in November and December issued warnings over the manufacturing standards at Sun Pharma and Dr Reddy's, raising doubts about a costly two-year-old campaign to revamp processes.
Both firms are India's biggest drugmakers by revenue.
"The regulators have really turned up the heat on the sector," said Jane Andrews, a partner at London-based investment management firm Smith & Williamson, which recently exited its holding in Sun Pharma.
Heavyweight generics makers, led by Sun Pharma and Dr Reddy's Laboratories, have long been seen as a conservative bet for domestic and foreign funds eyeing India, as these firms rely on the United States - the world's biggest pharmaceuticals market - for the bulk of their revenue.
But investors now say the prospects for these drugmakers are uncertain after the U.S. Food and Drug Administration in November and December issued warnings over the manufacturing standards at Sun Pharma and Dr Reddy's, raising doubts about a costly two-year-old campaign to revamp processes.
Both firms are India's biggest drugmakers by revenue.
"The regulators have really turned up the heat on the sector," said Jane Andrews, a partner at London-based investment management firm Smith & Williamson, which recently exited its holding in Sun Pharma.
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