According to reports, the Indian pharmaceuticals industry is expected to records revenue growth of 8-10 per cent in the current fiscal aided by steady domestic growth and increased exports to regulated markets, even as semi-regulated markets face headwinds.
Aniket Dani, Research Director at Crisil said, “Similar to last fiscal, domestic growth in fiscal 2024, will be led by a 5-6 per cent increase in realisations, supported partly by high price hikes allowed by the National Pharmaceutical Pricing Authority (NPPA) for drugs under price regulation.”
In addition, the sale of existing drugs and new launches will drive 3-4 per cent volume growth, he added.
The profitability of businesses is expected to improve this year, supported by lower costs and less pricing pressure. This comes after two years of lower margins due to challenges in the US market and higher input costs. Overall, the financial health of companies is expected to remain stable with manageable debts and moderate investment plans.
In the ongoing fiscal, domestic sales are expected to witness 8-10 per cent growth with the chronic segment expected to be the key contributor to revenues. This is due to the steady increase in lifestyle-related diseases and the continued emphasis on health awareness, post the pandemic, as stated by Crisil.
Formulation exports are projected to increase by 7-9 per cent in rupee terms this fiscal year. This growth will be driven by volumes, new product launches, and the alleviation of price pressure in the US generics market.
On the other hand, an increase in claw-back taxes in select European markets could lead to lower growth in exports to Europe this fiscal, it added.
According to Crisil, the growth in exports to Asia is expected to improve this fiscal year, following a modest growth last year. However, exports to Africa might continue to remain sluggish due to low forex reserves impacting the purchasing power and high currency volatility. On a positive note, lower input prices and the normalization of supply chains are anticipated to reduce inventories to pre-pandemic levels. This, in turn, should result in smaller incremental working capital debt for businesses in the current fiscal year.
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