Indian pharma headwinds to see subside in FY24: ICRA

economictimes.indiatimes.com:

ICRA said it expects the revenues of its sample set of 25 Indian pharmaceutical companies which account for 60% of the overall Indian pharmaceutical industry to grow by 7-9% in FY24. The revenue growth will be primarily supported by 8-10% expansion in the domestic formulation market and 6-8% growth in the US, while revenues from Europe and emerging markets are expected to rise by 3-5% and 8-10%.

ICRA expects the overall domestic formulation industry to grow 1-2% less than its sample set of companies. ICRA expects stabilisation of raw material and freight costs to ensure operating profit margin to be steady at 20.5-21.5% in FY24.

The continued focus on complex generics and specialty launches in the US market, is also expected to support industry margins in FY24, it added. The rating agency expects the overall credit profile of Indian pharmaceutical companies to remain healthy, supported by their stable earnings profile, comfortable leverage and coverage metrics, and strong liquidity position.

“8-10% growth in the domestic market in FY24 will be supported by a WPI (wholesale price index)-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," said Mythri Macherla, assistant vice president and sector head, ICRA. «While new product launches and sizeable revenues from generic Lenalidomide (launched during the end of Q4FYFY22) are expected to continue in FY24, growth in the US market is expected to moderate to 6-8% in FY24, given the large base and continued mid-high single digit price erosion for base products.” Patent expirations in the US are expected to be nearly $115-125 billion between 2023 and 2026.