Israel-Hamas War May Not Have Material Impact On Indian Pharma
Supply disruptions from Israel facilities could lead to Indian players gaining market share in U.S.
India's pharmaceutical companies may not see a major change in their export revenues, at least in the short term, because of the political instability in Israel due to military clashes with Hamas forces that intensified over the weekend.
India's exports to the entire Middle East are in the low single digits, said Abdulkader Puranwala, a pharma analyst with ICICI Securities Ltd. "India does not have a huge exposure to Israel, and overall, the Israeli pharma market is small." He does not see a major impact on the pharma export revenues of companies.
Limited Impact On Sun Pharma
Sun Pharmaceutical Industries Ltd.'s Israel-based subsidiary, Taro Pharmaceuticals Industries Ltd., has just 8% of its overall revenue coming from Israel as per its 2023 financials, and this is less than 1% of Sun Pharma's total sales.
Also, Taro has only one U.S. FDA-approved facility in Israel, which manufactures active pharmaceutical ingredients for exports. If the tensions in Israel were to continue, the impact would be limited to API exports.
However, in its SEC disclosures, Taro has stated that terrorist acts could result in disruptions to its business. "If terrorist acts were to result in substantial damage to our facilities, our business activities would be disrupted, since with respect to some of our products, we would need to obtain prior FDA approval for a change in manufacturing site," it said.
And this change of site approval could lead to some temporary disruptions.
"Our business interruption insurance may not adequately compensate us for losses that may occur, and any losses or damages sustained by us could have a material adverse effect on our business," Taro said in its filing.
Taro's stock was down 2.4% on Friday in both major U.S. exchanges.
If The War Continues For Long...
Israel's Teva Pharmaceutical Industries Ltd. could see a manufacturing disruption since it has two facilities that make APIs as well as formulations for the U.S. If the war-like situation were to continue in Israel, some Indian players could gain market share and also ease competition in the U.S.