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“Source:- IBEF”
ICRA Limited, the rating agency said that the Indian pharmaceutical industry is expected to grow around 10-12 per cent between FY19 and FY22 while maintaining a stable outlook on the sector.

It cited that the growth drivers for the Indian pharma companies are mostly because of the abating headwinds from pricing pressure in the US (which is considered to be the largest regulated market), stable growth for the Indian market driven by increasing healthcare spending and better accessibility along with comfortable balance sheet structure.

Although, ICRA said that the increased cost related to regulatory compliances, mainly for the US market, price controls across markets and compulsory genericisation for Indian market stayed to be the major risks.

“The domestic pharmaceutical industry has gained adequate scale and generic drug development capabilities over a decade of growth which will keep them in good stead to capture bigger opportunities, especially in the speciality/niche segments in the regulated market,” Icra said in a statement. The FY2019-2022 compound annual growth rate (CAGR) is expected to be around 10-12 per cent for domestic pharmaceutical companies, it added.

ICRA said that in FY2019, there was rise in the growth from the US to 12.1 per cent after witnessing a decline of 13.1 per cent in FY2018. “The growth was supported by higher market share for Indian players as several generic MNC players optimised product portfolios along with new product launches,” it added.

In FY2020, the pricing pressure which is led by the consolidated supply chain in US market along with decrease in the faster approvals of the abbreviated new drug application which is expected to remain in mid-single digit compared to low teens in FY2018.

Although, warning was given by ICRA about the growth in US market as it is projected to remain at high single digit to low double digit and will witness some troubles as there are relatively moderate proportion of large size drugs that are going off patent, adoption of generic medicine is reaching saturation levels in the US market and high regulatory scrutiny as reflected in increased issuance of warning letters/import alerts.

The company further said that the major concerns are the productivity of research and development expenditure, operational risk related to increased level of due diligence by regulatory agencies and price controls.