An ANDA is an option, not an asset
Indian generics companies still advertise how many ANDAs they have filed and had approved. The count measures effort. Value depends on how many competitors each product will meet, what price survives them and whether the named plant can supply.
Investor presentations by Indian generics companies still open with a familiar slide. It shows the cumulative number of abbreviated new drug applications filed with the USFDA, the number approved and the number awaiting approval, usually in a bar chart that rises every year. I have prepared that slide. I now think it measures the wrong thing, and that boards relying on it allocate research money badly.
An ANDA is a right to sell a generic version of a medicine in the United States once the agency approves it and any patents or exclusivities permit. It is valuable only if the product, once launched, earns more than it cost to develop, file, defend and manufacture. Whether it does depends on things the filing count cannot show: how many other companies launch the same product, how quickly the price falls once they do, and whether the plant named in the filing is in a condition to supply. The filing is an option on those conditions. It is not an asset in the way a plant or a receivable is an asset.
A filing count is a measure of effort
Developing a typical oral-solid generic at Meruvel involves formulation work, bioequivalence studies, exhibit batches at the plant that will make the product, and user fees under the US generic drug user fee programme. Depending on complexity, the cost of reaching a filing runs from a few crore rupees to several times that, before any litigation. Our research and development spending was ₹310 crore in 2024–25, about 7 per cent of revenue.
A count of filings treats all of that work as equivalent. A modified-release product that three companies will eventually make counts the same as an immediate-release tablet that twelve will. A filing that references a plant under a warning letter counts the same as one from a plant in good standing. In 2022 we had eleven pending applications referencing Unit III. On the slide they were pipeline. In practice they were options we could not exercise until the site was cleared, which took until early 2025. Five had been approved by the autumn of 2025, and the market for at least two of them had become crowded while we waited.
The count also rewards volume over judgement. If a development team is measured on filings, it will file. Products with crowded markets and thin margins are often easier to develop, so the count rises while the expected value of the portfolio may fall. Nobody in that chain is behaving badly. They are responding to the number they are shown.
Price the competitors you cannot see yet
The question that matters most for a generic is how many competitors it will meet in its first two years, and it is the question companies are least comfortable estimating. Nobody knows for certain who else is developing a product. But the evidence is better than many committees admit: the number of active-ingredient suppliers holding drug master files for a molecule, the number of companies that have challenged its patents, the complexity of its formulation and the size of its market all indicate how crowded a launch is likely to be.
At Meruvel we now ask for a range, not a point. For each proposed filing the portfolio team estimates the number of competitors at launch in a low, middle and high case, and finance converts each case into an expected net price after chargebacks, rebates and other deductions, using our own history of price erosion by competitor count. We add the plant capacity the product will consume, priced at what that capacity could earn making something else. The result is a launch-to-cash curve for each filing, showing the year in which cumulative cash turns positive under each case.
The curves are uncomfortable. Many immediate-release products that once looked attractive turn cash-positive only in the low-competition case, and some never do. A small number of complex products look better than our scientists' instincts suggested, because the development cost is high but the competitor count stays low. The exercise does not produce certainty. It produces a disagreement about the right things, which is all a committee can reasonably ask of a model.
First-to-file opportunities deserve a separate word. A company that files first with a patent challenge may earn 180 days of exclusivity, shared with any other first filers, and those months can repay a development budget many times over. They also bring litigation costs, uncertain timing and the possibility that a settlement or a court decision changes the value entirely. We treat each one as an individual decision for the board, with the legal assessment and the cash curve side by side, rather than as part of the ordinary filing plan.
Saying no in the portfolio committee
The hardest consequence of this approach is that we now file fewer products. Our internal portfolio committee approved about eighteen new filings a year before 2022. It now approves about ten, weighted towards modified-release and other complex oral products where competition is thinner. Our filing count grows more slowly, and analysts have asked about it on nearly every results call since.
There are costs I do not want to understate. Some products we declined were later launched by competitors who appear to be earning well from them; our estimates were wrong in those cases, and I would rather say so than pretend the method is infallible. Our scientists have had to accept that a project they could complete well may still be declined because the market it enters is crowded. Morale in development teams depends partly on seeing their work filed, and a lower count takes some of that satisfaction away.
The portfolio we are building has a better chance of paying for the plants that make it. In our product-level contribution statements, products launched since 2023 under the new criteria show a higher contribution margin than the cohort before them, though the sample is still small and some of the difference reflects market conditions we did not control.
For directors the practical point is modest. When a company presents its pipeline, ask how many pending filings reference plants in good standing, how many competitors management expects for the largest of them, and what share of research spending goes to products expected to meet fewer than five competitors. A management team that can answer those questions is pricing its options. One that can only show the cumulative count is still counting effort.