Indian Pharmaceutical Industry to Grow 8-10% in Current Fiscal
The Indian pharmaceutical industry is expected to grow by 8-10% in the current fiscal year, according to a report by Crisil. The growth will be driven by a steady domestic demand and increased exports to regulated markets.
The domestic market is expected to grow by 5-6%, led by an increase in realizations. This will be supported by high price hikes allowed by the National Pharmaceutical Pricing Authority (NPPA) for drugs under price regulation. In addition, sales of existing drugs and new launches will drive volume growth of 3-4%.
Exports are also expected to grow by 7-9% in rupee terms, driven by volumes from new product launches and abating price pressure in the US generics market. However, exports to Europe could be impacted by increase in claw-back taxes in select markets.
Operating profitability is also expected to improve by 50-100 basis points (bps) to 21% this fiscal, supported by moderation in input and logistics costs. This follows two consecutive years of margin contraction due to high pricing pressure in the US and a sharp rise in input costs caused by supply chain disruption during the Covid pandemic.
Credit profiles of pharmaceutical companies are expected to remain stable, owing to low-leverage balance sheets and moderate capex plans.
Here are some of the key takeaways from the article:
- The Indian pharmaceutical industry is expected to grow by 8-10% in the current fiscal year.
- The growth will be driven by a steady domestic demand and increased exports to regulated markets.
- Domestic growth will be led by an increase in realizations, supported by high price hikes allowed by the NPPA.
- Exports are also expected to grow by 7-9% in rupee terms, driven by volumes from new product launches and abating price pressure in the US generics market.
- Operating profitability is also expected to improve by 50-100 basis points (bps) to 21% this fiscal.
- Credit profiles of pharmaceutical companies are expected to remain stable.
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