The Indian pharmaceutical sector is predicted to perform better in FY25 than the previous financial year.
Despite various challenges including increasing inflation, geopolitical tensions along with policies to change drug prices, pharmaceutical industry is set to grow higher in 2024. Apart from fulfilling national demand, the Indian pharmaceutical industry commands more than 20% of the global supply chain. Indian pharmaceutical sector meets at least 60% of the global demand for vaccines. It also provides 40% of the generic drug requirements in the USA along with supplying one fourth of medicines in the UK.
In this article, we will discuss how Indian pharmaceutical sector is going to perform in FY25.
Innovation in pharma technology has three categories broadly: clinical trials, research and development (R&D), and sales and marketing.
“Following the high base of 2023-24, the revenue growth momentum from the US and Europe markets is expected to moderate to 8-10 per cent and 7-9 per cent, respectively,” Investment Information and Credit Rating Agency (ICRA) report mentioned.
The report further claimed: “The markets are expected to witness a year-on-year expansion of 18-20 per cent and 16-18 per cent, respectively, in the current fiscal year.”
“Indian pharmaceutical companies remain focused on enhancing their revenue contribution from the complex generics in the US market,” the survey report mentioned.
“Revenue growth of leading 25 domestic drug firms is expected to moderate to 8-10 per cent in the next fiscal year,” ICRA report mentioned.
The satisfying update is that the growth is expected in both domestic and international sectors.
In previous decade, Nifty Pharma has shown a Compound Annual Growth Rate (CAGR) of around 10%. The time between 2009 to 2016 saw the most prosperous phase for Indian pharma stocks, with an impressive CAGR of approximately 30%. Even during pandemic, Indian healthcare stocks experienced a notable growth. However, in post-pandemic era, even in a volatile market scenario, investing in pharma stocks may give you profits. Among many, Sun Pharmaceutical Ltd, Cipla, Dr Reddy's Laboratories, Torrent Pharmaceuticals, Gland Pharma, Abott are the top performing pharma stocks.
The Concerns:
In 2023, many Indian drug firms have received warning letters and import alerts by the US Food and Drug Administration (USFDA). This led to delayed product launch, increasing cost burdens, impacting the overall profit margins.
Infrastructure is another constraint for the Indian pharmaceutical supply chain. Inspite of rapid progress in last decade, insufficient transportation and logistics infrastructure is still a worry for the nation.
“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,” ICRA Assistant Vice President and Sector Head Mythri Macherla stated.
Yogesh Mudras, Managing Director, Informa Markets, India, the organisers of PharmaLytica in a press statement released here said, “The growth potential of the Indian pharmaceutical industry is attributed to its large domestic market, cost-effective manufacturing capabilities, and skilled workforce. Supported by the government’s policies and initiatives like ‘Pharma Vision 2020’ and ‘Make in India’, India aims to become a global pharmaceutical hub.”
As per Industry insiders; the Indian pharma sector will soon leverage robotics and digitalisation. This will include the use of data analytics, automated systems, as well as cloud-based architecture.
