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Pharma sector growth may remain strong, experts say

Pharma sector growth may remain strong, experts say

Monday October 05, 2015 , 3 min Read

Growth momentum of the domestic pharma sector is likely to sustain in the near to medium term owing to steady demand witnessed across therapy segments, regular new launches and price hikes taken by companies, a report by rating agency ICRA said. "With steady demand being witnessed across therapy segments, regular new launches and price hikes taken by companies in line with Drug Price Control Order (DPCO) guidelines, we expect growth momentum to sustain in the near to medium term", the report said.


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The regulatory risk of additional therapy segments being brought under control remain a concern with NPPA proposing to bring at least 100 more drugs under control by making corrections to DPCO 2013, ICRA said. After experiencing moderation in the growth momentum in FY 2014 on back of price cuts and trade related disruptions, the growth in the domestic pharmaceutical industry bounced back with the industry registering a growth of 12.9 per cent on MAT basis as on March 2015 and 14.3 per cent as on June 2015.

Much of this recovery has been led by price hikes implemented by companies in their National List of Essential Medicines (NLEM) portfolio, stabilisation of supply related issues, and increased market penetration. In addition, the lifestyle oriented therapy segments have continued to grow steadily, which along with increased focus by companies towards introducing new products and enhancing field force productivity has also contributed to the growth momentum, the report said.

ICRA also expects steady growth of pharma sector in US market over the medium term. "We believe Indian companies would continue to experience steady growth in the US over the medium term on back sizeable generic opportunity (drugs with brand value of USD 25-30 billion are expected to face generic competition over the next 2-3 years) and strong product pipeline of pending ANDAs with high increasing proportion of complex generics that compares favorably with generic majors such as Teva and Mylan".

The recent acquisition by companies such as Lupin and Cipla are likely to further support scaling up of business, it said. ICRA pointed out that macro environment and currency headwinds may pose a near term challenge in emerging markets. The growth in the emerging markets portfolio (for our sample) slowed down from 24 per cent in FY 2013 to 16 per cent in FY 2014 and further to 2 per cent in FY 2015 with Q1 FY2016 registering de-growth of 4.4 per cent.

Image Credit: Shutterstock


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