Insurance glitch may trip pharma firm's US jaunt
By siliconindia staff writer   |   Wednesday, 03 March 2004, 20:30 IST
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MUMBAI: Pharmaceutical companies that are planning to launch new formulations and rengineered drugs in the US markets may find inadequacy of insurance an inhibiting factor. Reinsurers have halved per company limits in respect of product liability insurance to $700m following a spate of claims, reports Economic Times. That is not all. As a result of claims the cost of product liability insurance has risen by 50-250% in the last two to three years. Insurers have also increased deductibles - the initial portion of the loss that insured’s have to meet on their own - upto $5m for large companies, with the average deductible around half a million dollars. According to Ted Hodgikinson, regional director, Aon Asia - a reinsurance broking firm, there have been 14,428 cases regarding product safety pertaining to pharmaceutical products and the success rate for the plaintiffs was around 49%. These claims coupled with withdrawal of drugs by manufacturers have turned insurers nervous and compelled them to reduce their exposure. Hodgikinson specialises in the Indian pharma sector to explore business opportunities with pharma companies. Some of the exporters, he said, had no idea of the liability cover they would need in the US and were looking at covers of $500000. “Half a million would cover lawyers fees for half a day,” said Hodgikinson.

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