Higher exports leading to stronger emergence of Indian Pharma sector !

Higher exports are likely to help the Indian pharma sector to garner upto eight to nine per cent growth this fiscal. It is expected that the Rs 2.8 lakh crore Indian pharmaceutical sector is set to emerge stronger due to higher exports despite the COVID-19 pandemic this fiscal.
A report by CRISIL says that the Indian pharma sector is well-diversified with exports and domestic formulations accounting for almost equal share. The report points out that this fiscal, the growth in exports will be around 11-12 per cent when compared to 10 per cent during the last fiscal. 

The growth in the regulated markets will be supported by steady increase in new product launches from compliant plants that will lower pricing pressure on existing generics, and a visible easing in scrutiny by the United States Food and Drug Administration (US FDA) in recent months. 

“India accounted for almost half the abbreviated new drug application approvals provided by the US FDA since fiscal 2019. This strong pipeline, coupled with lower import alerts and warning letters in recent months, should ensure a steady pace of new launches, which will help sustain export momentum to regulated markets,” remarked Isha Chaudhary, Director, CRISIL Research. 

At the same time exports to ROW markets, too, are expected to rebound to 10 per cent compared with 7 per cent this fiscal that will be driven by opportunities in under penetrated generic markets such as Africa and Latin America. Also, bulk drug exports are expected to benefit from moves worldwide to reduce dependence on China.

It is expected that despite the slight moderation in business performance, credit profiles of domestic companies would remain largely steady, benefiting from healthy balance sheets and liquidity. Equity infusions from private equity funds have also helped improve credit metrics in recent times. Experts at CRISIL expect an increase in capital and research and development spending, as well as efficient working capital management will enable Indian pharma companies to manage transition through the current challenging times. 

However there are challenges as a few large Indian pharmaceutical companies are facing antitrust suits in the US and any unanticipated litigation costs or adverse developments such as increased US FDA scrutiny impacting new product launches will be monitorables.

Reference: theweek.in