Steady domestic pharma sales and higher exports to regulated markets to support revenue growth of 8-10% this fiscal
Low-leveraged balance sheets, sizeable liquidity to keep credit profiles stable
City Air News
Sep 11, 2023 11:23
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Mumbai, September 11, 2023: The Indian pharmaceuticals sector is expected to log revenue growth of 8-10% in fiscal 2024, similar to last fiscal, supported by steady domestic growth and increased exports to regulated markets, even as semi-regulated markets face headwinds.
Operating profitability is also seen improving 50-100 basis points (bps) to ~21% this fiscal, supported by moderation in input and logistics costs, and abating pricing pressure in the US generics market. This follows two consecutive years of margin contraction due to high pricing pressure in the US and a sharp rise in input costs caused by supply chain disruption during the pandemic, and thereafter.
Says Aniket Dani, Director, CRISIL Research, “Similar to last fiscal, domestic growth in fiscal 2024, will be led by 5-6% increase in realisations, supported partly by high price hikes (linked to the Wholesale Price Index of previous year) allowed by the National Pharmaceutical Pricing Authority (NPPA) for drugs under price regulation.2 In addition, sale of existing pharma drugs and new launches will drive 3-4% volume growth.”
Says Aditya Jhaver, Director, CRISIL Ratings, “Better profitability and lower working capital needs will further strengthen the balance sheets and liquidity of CRISIL Ratings-rated manufacturers, leading to healthy debt metrics. We expect the Debt/Ebitda ratio to improve to 1.1 times in fiscal 2024 from 1.3 times last fiscal. Also, despite higher interest rates, interest coverage ratio of players is seen robust at over 9 times.”
