Domestic Drug Firms To Witness 8-10% Revenue Growth In FY25: Report
The revenue of the companies, which account for 60% of the overall Indian pharmaceutical industry, witnessed an increase of 13-14% in the current fiscal year.
Revenue growth of leading 25 domestic drug firms is expected to moderate to 8-10% in the next fiscal year, rating agency Icra said on Thursday.
The revenue of the companies, which account for 60% of the overall Indian pharmaceutical industry, witnessed an increase of 13-14% in the current fiscal year.
Following the high base of 2023-24, the revenue growth momentum from the U.S. and Europe markets is expected to moderate to 8-10% and 7-9%, respectively, Icra said.
The markets are expected to witness a year-on-year expansion of 18-20% and 16-18%, respectively, in the current fiscal year, it added.
The domestic market, on the other hand, is expected to see a stable growth of 6-8%, while the emerging markets may log an 8-10% rise in FY25, against 16-18% in FY24, the rating agency said.
The revenue growth of the sample set companies in the U.S. market in FY24 has been supported by increased new product launches, product shortages in select therapeutic segments, and healthy performance of complex generics (first to file), it stated.
"However, as the base effect plays out, growth is expected to taper in FY25. While low-single digit pricing pressure in the U.S. market is likely to sustain, Indian pharmaceutical companies remain focused on enhancing their revenue contribution from the complex generics in the U.S. market," it stated.
Commenting on key risks being faced by the industry, Icra Assistant Vice President and Sector Head Mythri Macherla said the number of warning letters and import alerts issued by the USFDA to Indian drug firms have increased in the past year.
This has led to delays in product launches, translating into failure to supply penalties and entailing significant cost burden towards remedial measures like hiring consultants and consuming additional management bandwidth, thus impacting the profit margins, she added.
"Further, while the ongoing Red Sea crisis has not had an impact on the Indian pharmaceutical companies as of now, any adverse impact in the form of supply chain disruptions or increase in logistics costs will be a key monitorable," Macherla stated.
Besides, since price growth has been a key revenue driver, any developments favouring genericisation and inclusion of more products under the NLEM remain key risks for the industry players, she added.