Indian Pharma Industry Poised for 8-10% Revenue Growth This Fiscal: Crisil

• ByStartupStory     |    September 11, 2023

According to a report by Crisil, the Indian pharmaceutical industry is expected to achieve revenue growth of 8-10% in the current fiscal year. This growth will be driven by steady domestic expansion and increased exports to regulated markets, despite facing challenges in semi-regulated markets.

The study, which analyzed 186 drug makers responsible for about half of the sector’s Rs 3.7 lakh crore annual revenue in the last fiscal year, supports these findings.

Domestic growth in the current fiscal year is anticipated to be led by a 5-6% increase in realizations, partially supported by significant price hikes permitted by the National Pharmaceutical Pricing Authority (NPPA) for regulated drugs. Additionally, sales of existing drugs and new product launches are expected to drive 3-4% volume growth.

Operating profitability is also projected to improve by 50-100 basis points (bps) to 21% in the current fiscal year. This improvement is supported by reduced input and logistics costs and the easing of pricing pressure in the US generics market, following two consecutive years of margin contraction due to pricing pressure and increased input costs.

The credit profiles of pharmaceutical companies are expected to remain stable due to their low-leverage balance sheets and moderate capital expenditure plans.

In the current fiscal year, domestic sales are predicted to grow by 8-10%, with the chronic segment playing a significant role in revenue growth due to the rising prevalence of lifestyle-related diseases and increased health awareness post-pandemic.

Formulation exports are anticipated to increase by 7-9% in rupee terms this fiscal year, driven by volume growth from new product launches and reduced pricing pressure in the US generics market. However, increased claw-back taxes in select European markets may hinder export growth to Europe.

“Growth in exports to Asia will improve this fiscal, after clocking a modest growth last fiscal, while exports to Africa will continue to remain sluggish on account of low forex reserves (impacting the purchasing power) and high currency volatility,” Crisil said.

Lower input prices and the normalization of supply chains are expected to reduce inventories to pre-pandemic levels, resulting in smaller incremental working capital debt in the current fiscal year.

Follow Startup Story