The Indian pharmaceutical sector is projected to see revenue growth of 8-10% this financial year, driven by strong exports to regulated markets such as the US and Europe, a recovery in semi-regulated markets including Africa and Asia, and consistent domestic demand, according to a CRISIL Ratings report. This forecast follows a successful previous year with approximately 10% growth.

Positive Outlook

The positive outlook is supported by reduced pricing pressure in the US generics market and improved operating leverage, which is expected to boost operating margins by 70-80 basis points to around 22.5%. Steady cash flows and low financial leverage further reinforce the sector's stability, enabling companies to maintain stable credit profiles while pursuing acquisitions in niche therapeutic areas.

Export Growth

The report highlights that formulation exports are anticipated to grow by 12-14% in rupee terms, with regulated markets experiencing a 13-15% increase due to drug shortages, new product launches, and a shift towards specialty products and niche molecules. Exports to semi-regulated markets are forecasted to rise 8-10%, supported by improving foreign exchange reserves and stabilizing currencies in African and Latin American countries.

Domestic Revenue Trends

Domestically, revenue is expected to grow by 7-9%, driven by price increases in non-NLEM products, although growth in the NLEM portfolio is likely to remain subdued. The chronic segment, influenced by rising lifestyle-related diseases and increased health awareness post-pandemic, is expected to contribute significantly to domestic revenue growth.

Risks and Challenges

Despite these positive trends, CRISIL warns that large-scale debt-funded acquisitions, regulatory challenges, potential price caps on raw materials, and litigation costs from US antitrust suits could pose risks to the sector. Companies must navigate these challenges while leveraging growth opportunities in both domestic and international markets.

For further updates on similar issues and investment opportunities, explore the Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi and stay informed with the Top News Headlines - Share Market News, Latest IPO News, Business News, Economy News- Finance Saathi.

Join our Trading with CA Abhay Telegram Channel for stock market trading insights and the Finance Saathi Telegram Channel for regular updates on share markets and IPOs.

Start your stock market journey by opening a free demat account with Choice Broking FinX.