Domestic pharma industry is expected to report moderate revenue growth of 7-9 per cent in the current fiscal, due to headwinds in export sales in the regulated markets and high-base effect in the domestic formulations business, as per rating agency CRISIL.
Operating profitability will shrink another 200-250 basis points (bps) after the 130 bps decline last fiscal due to continued pricing pressure in the US generics market, and high input and freight costs which offset moderate revenue growth, it said.
The rating agency's estimates are based on a study of 184 drug makers that account for 55 per cent of the Rs 3.4 lakh crore-a-year sector revenue.
CRISIL stated that the domestic formulations market is expected to grow 7-9 per cent this fiscal, on a 15 per cent growth last fiscal, led by a 6-8 per cent average price increase allowed by the National Pharmaceutical Pricing Authority in March 2022 and on the back of new product launches.
While the demand for Covid-19 induced drugs and vitamins is fading, a pickup in lifestyle-related chronic portfolio drugs and a few acute portfolio drugs, such as in the dermatology and ophthalmology segments, is likely to drive demand this fiscal, it added.
CRISIL Research Director Aniket Dani said 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," he added.
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