India’s pharma industry expects to report moderate revenue growth of 7-9% in current fiscal of FY23, as per the estimates of rating agency CRISIL.
The rating agency attributed headwinds in export sales in the regulatory markets and the high-base effect in the domestic formulations business as the major reason for strong revenue growth.
As per the estimates by CRISIL, the operating profitability will shrink another 200-250 basis points (bps). Earlier, 130 bps decline was registered in FY22 due to continued pricing pressure in the US generics market amid high input and freight costs which offset moderate revenue growth.
In addition to this, the growth is led by a 6-8% average price increase as allowed by the National Pharmaceutical Pricing Authority in March 2022 for the drugs covered under the Drug Price Control Order, and on the back of new product launches. While the demand for Covid-19-based drugs and vitamins is declines, a pickup in lifestyle-related chronic portfolio drugs also including drugs related to dermatology and ophthalmology segments, is likely to drive demand this fiscal year.
As for exports, formulations and bulk drugs contribute ~81% and ~19% respectively to the total sales. The export formulations market remained flattish in fiscal 2022 on a higher base of previous fiscal.
“Formulation exports could grow 6-8% this fiscal, driven by 11-13% growth in rupee terms in the semi-regulated markets”, said Aniket Dani, Director, CRISIL Research.
He further added, “The growth in US generics market will moderate given continued pricing pressure. The rupee’s depreciation saves some blushes, though. Exports to other regulated markets could grow faster as global companies diversify geographically.”
The rating agency’s estimates are based on a study of 184 drug makers that account for 55% of the Rs3.4 lakh crore-a-year sector revenue.
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