Pharmaceutical firms to increase R&D Spending

June 7, 2016

Pharmaceutical companies are increasing their Research and Development (R&D) spending to launch differential and specialty products as their core US business comes under pressure.

Overall, their business in America has been impacted due to pricing pressure and supply channel consolidation. The margins have declined for some, owing to pricing pressure, increased spending on R&D and currency fluctuations.

On a positive note, progress in remediation for companies with regulatory issues are set for completion and in line with expectation, according to Religare Institutional Research.

Going forward, pricing pressure is expected to increase by 5 or 10 percent. Drug makers are gearing up to overcome the challenges by focusing on specialty products. In a post results conference call with analysts, Sun Pharma Managing Director Dilip Shanghvi said they would do this in the US and this could impact profitability in the short term. “Our strategy is to build stable long term profitability,” Shanghvi said.