According to a report by Crisil, the Indian pharmaceuticals industry is expected to post revenue growth of 8-10% in the current fiscal year, aided by steady domestic growth and increased exports to regulated markets, even as semi-regulated markets face headwinds.
According to Crisil, this is supported by a survey of 186 drug makers that accounted for over half of the Rs. 3.7 trillion annual revenue of the sector in the last fiscal year.
As per Mr. Aniket Dani, Crisil Research Director, similar to the previous fiscal year, domestic growth in FY24 will be driven by a 5-6% increase in realisations, with support from significant price increases allowed by the National Pharmaceutical Pricing Authority (NPPA) for drugs under price regulation. The sale of current medications and the introduction of new ones will also contribute to a 3-4% volume increase, he added.
By reducing input and logistics costs and easing pricing pressure in the US generics market, it is anticipated that operating profitability will increase by 50-100 basis points (bps) to 21% this fiscal year. According to Crisil, this comes after two years in a row of margin contraction because of high pricing pressure in the US and a sharp increase in input costs brought on by supply chain disruption during the COVID-19 pandemic and thereafter.
Because of the steady increase in lifestyle-related diseases and the continued emphasis on health awareness following the pandemic, domestic sales are anticipated to expand by 8-10% in the current fiscal year, with the chronic segment projected to be the major contributor to revenues, according to Crisil.
This fiscal year, formula exports are expected to increase by 7-9% in rupee terms, mostly due to volume, new product introductions, and easing price pressure in the US generics markets, the report stated.
A reduced increase in working capital debt this fiscal year is expected as a result of lower input costs and the normalisation of supply chains, which should reduce inventories to pre-pandemic levels.