Tablets move along the production line before packaging at a drug manufacturing facility in Russia. Photographer: Andrey Rudakov/Bloomberg  

Big Pharma Firms To Grow In Double Digits In FY19, Says Crisil

After two consecutive years of single-digit expansion, big Indian drug firms are expected to return to double-digit growth in the current financial year aided by the recovery in the U.S. sales, weakening of the rupee and revival of domestic demand, rating agency Crisil said.

The return to double-digit growth would help the homegrown pharma companies, with a turnover of Rs 1,000 crore or more, to weather a sharp rise in input costs.

As per Crisil, green shoots are already visible in the first quarter for 20 of these listed drugmakers, which account for three-fourths of the pharma industry revenue.

The U.S. and the domestic markets contribute on average 30 percent and 35 per cent of their revenues, respectively. “The U.S. market is witnessing an upturn after de-growth in five of the past eight quarters through June 2018,” Crisil Ratings Senior Director Anuj Sethi said.

Revenue from the U.S. rose 7 percent in the first quarter of this fiscal compared to a muted show in the same quarter of 2017-18, he said.

“We expect 6-7 percent growth this financial year, backed by lower intensity of regulatory issues, faster product approvals and improving share of complex products,” Sethi said. "This will also help offset pricing pressure faced in existing products.”

Better domestic demand will complement the recovery in the U.S. sales, he said.

“Domestic revenues of big pharma companies is expected to rise 12-13 percent in 2018-19, given better access to healthcare and deeper penetration of health insurance,” Sethi noted.

The recovery is already reflected in the first quarter with the domestic segment growing 25 percent year-on-year, albeit on a low base, as the first quarter of the previous year was severely impacted by retailers destocking ahead of the Goods and Services Tax implementation, he said.

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