Sluggish exports to regulated markets will cap pharmaceutical industry revenue growth this fiscal year: CRISIL

Operating profitability will decline another 200 to 250 basis points (bps) after last year’s 130 bps decline due to continued pricing pressure in the U.S. generics market and high input and freight costs offsetting moderate revenue growth. Even so, the credit quality of pharma players will be stable due to low leverage balance sheets and moderate investment plans, according to a CRISIL survey of 184 drugmakers who account for around 55% of Rs 3 sector revenue, 4 lakh crore-year. as much.

The sector is well diversified, with domestic and export sales representing an almost equal share of revenue.

The National Formulations market is expected to grow 7-9% this fiscal year, compared to growth of approximately 15% in the prior fiscal year, driven by an average price increase of 6-8% authorized by the National Pharmaceutical Pricing Authority (NPPA) in March 2022 for drugs covered by the Drug Price Control Order (DPCO), and following new product launches. As the demand for COVID-19-induced drugs and vitamins declines, a pick-up in lifestyle-related chronic portfolio drugs and a few acute portfolio drugs, such as in the dermatology and ophthalmology segments, should drive demand this fiscal year.

Speaking in this regard, Aniket Dani, Director of CRISIL Research, said in the report: “Exports of formulations could increase by 6-8% this fiscal year, driven by growth of 11-13% – in rupees – over the half-year regulated markets Growth in the US generics market will be moderate given continued price pressure Depreciation of the rupee, however, avoids some blushes Exports to other regulated markets could grow faster as global companies diversify geographically.

In addition to this, Tanvi Shah, Associate Director, CRISIL Ratings, also said, “Despite moderating operational performance and increasing working capital requirements, the credit profiles of rated players will remain stable this fiscal year, benefiting from strong balance sheets and healthy liquidity. We expect debt protection measures to remain sound, with debt/EBITDA increasing to 1.1x from 0.8x last year. Additionally, despite rising interest rates, the industry’s interest coverage ratio will continue to remain healthy at more than 12 times this fiscal year.