Pharma cos’ top line to swell by 9% this fiscal

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

New Delhi: Revenue of top domestic pharmaceutical companies is likely to grow by 7-9 per cent in the current fiscal, according to rating agency Icra. The growth will be supported by an 8-10 per cent expansion in the domestic market and a 6-8 per cent rise in the US market, while revenues from the European and emerging markets are expected to increase by 3-5 per cent and 8-10 per cent, respectively, it noted. Icra said it has taken into account a sample set of 25 Indian drug firms, which constitute 60 per cent of the overall domestic industry. The segment reported a growth of 10 per cent in the 2022-23 fiscal. Icra said that a continued focus on complex generics/speciality launches in the US market is expected to support industry margins in FY2024.

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, it added. “The 8-10 per cent growth in the domestic market in FY2024 will be supported by a WPI-linked price hike of 12.1 per cent allowed for products under the National List of Essential Medicines (NLEM), new product introductions and annual price hikes for non-NLEM products,” Icra Assistant Vice President & Sector Head Mythri Macherla said. Growth in the US market is expected to moderate to 6-8 per cent in FY2024, given the large base and continued mid-high single-digit price erosion for base products, she added.

USFDA inspections have gained momentum in the recent past, and regulatory risks remain a key monitorable, the rating agency stated. The agency also pointed out the recent instances of cyber attacks on some Indian pharmaceutical companies, leading to temporary disruptions in their operations. “The frequency of such attacks and their impact on the companies’ business and financial profiles remain monitorable,” it added. The annual capex run rate for the sample set is likely to be Rs20,000 crore in FY2024. It stood at Rs51,600 crore in FY2023 due to a large acquisition by one of the companies, it added.