Indian Pharma Industry To Record Revenue Growth Of 8-10% In FY24: CRISIL

The growth momentum will be facilitated by consistent domestic growth and an increase in exports to regulated markets, even as semi-regulated markets face headwinds. 

The Indian pharmaceutical industry is estimated to record a revenue growth of 8 to 10 per cent in the current fiscal year, a report by Crisil Ratings revealed on Monday. The agency stated that the growth momentum will be facilitated by consistent domestic growth and an increase in exports to regulated markets, even as semi-regulated markets face headwinds. 

The agency included 186 drug makers in the study, who together contributed to almost half of the Rs 3.7 lakh crore annual revenue of the industry, reported PTI. Crisil’s research director, Aniket Dani, stated that domestic growth in the current fiscal year (2023-24) will lead to an increase in realisations by 5 to 6 per cent, similar to the previous financial year. This growth will be supported by a surge in price hikes for drugs under price regulation, allowed by the National Pharmaceutical Pricing Authority (NPPA). 

Further, Dani stated that existing drug sales and new launches will add 3 to 4 per cent volume growth. Operating profitability is also estimated to improve by 50 to 100 basis points to reach nearly 21 per cent in the year (FY24), he added. The agency executive noted that this growth will be facilitated by a moderation in input and logistics costs and the subsiding pricing pressure in the US generics market.

The agency pointed out that this development follows two straight years of weakening margins due to the increasing pricing pressure in the US and a surge in input costs due to supply chain disruptions caused by the COVID-19 pandemic. 

The report stated, “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, because of the steady increase in lifestyle-related diseases and continued emphasis on health awareness, post the pandemic.”

The agency noted that while formulation exports are expected to increase 7 to 9 per cent in rupee terms in the fiscal on new launches, an increase in claw-back taxes in certain European markets could create a damper in growth in exports to Europe in the period. However, exports to Asia will witness an improved growth trajectory, and exports to Africa will continue on a stagnant path due to low forex reserves, in turn impacting purchasing power and high currency volatility, the report added.