Indian pharma industry to hit $57 billion by FY25
New Delhi: Domestic pharmaceutical industry will likely hit $57 billion by FY25, along with expansion in operating margins by 100-150 basis points (bps), according to a report by CareEdge Ratings. During FY18 to FY23, the Indian pharmaceutical industry has logged a a compound annual growth rate (CAGR) of 6-8%, primarily driven by an 8% increase in exports and a 6% rise in the domestic market. In FY23, the Indian pharma market saw a year-on-year growth of nearly 5%, reaching $49.78 billion.
While exports grew a modest 3%, the domestic market increased 7% year-on-year. Among export markets, emerging markets remained relatively flat, while developed markets recorded an 8% growth in FY23. Exports to emerging markets were affected by the Russia-Ukraine conflict, scarcity of foreign currency in several African countries, and significant depreciation of local currencies.
Despite facing pricing pressures in the US generics market, formulation companies managed to maintain their margins at around 22% in FY23. This was largely because of their focus on complex and specialty products. On the other hand, operating margins of APIs/bulk drugs companies contracted nearly 170 bps year-on-year, reaching approximately 18% in FY23.
CareEdge ratings expects the pharmaceutical industry to grow at 7-8% in FY24-FY25, supported by a 6-7% growth in exports and an 8-9% growth in the domestic market during the same period. “With the stabilisation of raw material prices, freight rates, and easing of pricing pressure in US generics market along with a focus on complex and speciality products, CareEdge Ratings expects the operating margin of industry players to improve by 100-150 bps over FY24-FY25 compared to FY23," it added. “The Indian pharma
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