By Rishika Sadam

HYDERABAD, May 27 (Reuters) - Indian drugmakers, which

have the U.S. market as a key segment, will sustain their

revenue improvement in fiscal 2025 due to drug shortages in the

United States, Mumbai-based India Ratings and Research said on

Monday.

India is a hub of bulk generic drug manufacturing and

drugmakers including Dr Reddy's, Cipla, Sun

Pharma derive a significant share of revenue from both

the U.S. and Europe.

The world's largest drug market is facing decade-high drug

shortages, the research firm said in a note citing data from

with Utah Drug Information Service.

There is an active shortage of 233 drugs across 22

therapeutic categories as of April, led mainly by discontinuing

production of some drugs, rising demand and delays in shipments,

it said, also citing data from the U.S. Food and Drug

Administration.

"US-catering Indian generic players have seen a strong

financial performance during FY24, due to lower raw material

cost and stability in pricing," said Vivek Jain, Director of

Corporate Ratings at India Ratings and Research.

Reddy's reported a 29% jump in North America sales for the

most recent quarter ended March 31, while Cipla saw an 11% jump

in revenue from the region.

Smaller rival Lupin's North America sales grew 22.6% during

the fourth quarter.

IMPROVED RESULTS

India Ratings and Research said increasing regulatory costs

led to many US-based generic pharma manufacturers halting the

production of certain drugs.

The increasing complexity of filing applications for new

drugs is adding to the shortages and reducing competition, the

research firm added.

Indian companies could likely fill the gap by expanding

supply chains and increasing participation across therapeutic

categories, it said.

Earlier this month, both Reddy's and Cipla said they are

preparing for new launches in the U.S.

Additionally, price erosion in the U.S. market - where lower

prices amid stiff competition affect drugmakers' margins - is

expected to fall to the single digits over the next 12 to 18

months from double digits in 2022, the research firm said,

likely improving returns.