Indian Pharma Industry Set for 9-11% Revenue Surge in FY24: Icra

The revenue of 25 leading domestic pharmaceutical companies in India is projected to grow by 9-11% in the current fiscal year (FY24), according to a report by credit rating agency Icra. This growth is expected to be driven by several factors, including an 11-13% expansion in the US market, a 7-9% increase in the domestic market, and 11-13% and 13-15% growth in the European and emerging markets, respectively.

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Key Market Drivers

The US market has traditionally been a significant revenue contributor for Indian pharmaceutical companies, accounting for a substantial portion of their earnings. However, the share of revenues from the US market for Icra's sample set of companies declined to 35% in FY22 compared to 40% in FY20. This decline was attributed to consistent pricing pressure, the absence of major blockbuster products going off-patent, and increased regulatory scrutiny in recent years.

Despite these challenges, the US market is showing signs of recovery. With the easing of pricing pressure, significant new product launches, and shortages of certain products, the share of revenues from the US market increased to 37% in FY23 and further to 38% in the first half of FY24.

Research and Development

Icra expects research and development (R&D) expenses for its sample set of companies to stabilize at 6.5-7% of their revenues. This indicates that companies are optimizing their spending, focusing more on complex molecules and specialty products rather than plain vanilla generics.

The Indian pharmaceutical industry is poised for growth in FY24, driven by a combination of factors such as increasing demand in key markets, a focus on innovation, and cost optimization. While challenges remain, the industry is well-positioned to capitalize on growth opportunities and continue contributing to the healthcare sector.