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Top Indian pharma firms to grow at 7-9% in FY2024: ICRA
The agency has taken into account a sample set of 25 Indian pharma firms, including Dr Reddy’s Laboratories, Sun Pharmaceutical Industries, Cipla and Abbott, which account for about 60% of the overall domestic industry.
- By Pooja Chaturvedi Sah
- New Delhi
- Jul 26, 2023
Revenue of India’s top domestic pharmaceutical companies is likely to grow by 7-9% in fiscal year 2024, post a year-over-year growth of 10% in fiscal year 2023, a report by credit rating agency ICRA has suggested.
ICRA has projected steady growth for the Indian pharmaceutical industry, despite headwinds and regulatory challenges.
The agency has taken into account a sample set of 25 Indian pharma firms, including Dr Reddy’s Laboratories, Sun Pharmaceutical Industries, Cipla and Abbott, which account for about 60% of the overall domestic industry.
This growth will be supported by 8-10% expansion in the domestic market and 6-8% growth in the US market. Revenues from the European market and Emerging Markets are expected to rise by 3-5% and 8-10%, respectively, according to the agency.
ICRA said that a continued focus on complex generics/specialty launches in the US market is expected to support industry margins in Fiscal year 2024.
"The 8-10% growth in the domestic market in FY2024 will be supported by a WPI-linked price hike of 12.1% allowed for products under the National List of Essential Medicines (NLEM), new product introductions and annual price hikes for non-NLEM products," says Mythri Macherla, ICRA Assistant Vice President & Sector Head.
Macherla further added that the growth in the US market is expected to moderate to 6-8% in Fiscal year 2024, “given the large base and continued mid-high single-digit price erosion for base products”, she said.
According to ICRA, the growth of Indian pharma companies in the US, over the next few years, will be boosted by patent expirations in the US which are expected to be nearly $ 115-125 billion between 2023 and 2026. Of this, biosimilars will comprise around $35-40 billion.
The rating agency said that the acquisitions made by the Indian pharma companies in recent times has strengthened their specialty molecule portfolio in this market. The key focus areas include biosimilars, inhalation, ophthalmology, dermatology, CNS, oncology, anti-diabetes, osteoarthritis, and pulmonary.
The overall credit profile of Indian pharmaceutical companies is expected to remain healthy, supported by their stable earnings profile, comfortable leverage and coverage metrics, and strong liquidity position, the report added.
The annual capex run rate for ICRA’s sample set is predicted to be Rs 20,000 crore in Fiscal year 2024, a decline from Rs 51,600 crore in fiscal year 2023, due to a large acquisition by one of the companies, the agency reported.