INDIA – According to credit rating agency ICRA, the Indian pharma industry is expected to grow at a rate of 9-11 percent in 2021-22, with domestic and emerging markets driving growth in the coming quarters.

According to ICRA, revenue growth in the second quarter of FY22 was moderate at 6.4 percent, down from 16 percent in the first quarter of 2021-22 in a sample of 21 Indian pharmaceutical companies.

It attributed the growth to increased demand for non-COVID products, as well as new product introductions, rupee depreciation, and expanded market coverage.

The normalization of the base and pricing pressures in the US market were the main reasons for the slowing growth momentum in Q2 FY22, even though growth in domestic and emerging markets remained healthy, ICRA said in a statement.

“Revenue growth for ICRA sample set is estimated at 9-11 per cent in FY2022 and FY2023, supported by gradual recovery post the impact of COVID-19,” ICRA Assistant Vice-President and Sector Head Mythri Macherla said.

The sample set is expected to grow by 13-15 percent in the domestic market, 14-16 percent in emerging markets, and 9-11 percent in European business in FY22, she added.

Given the pricing pressure, Macherla expects growth in the US business to remain muted.

In the domestic market, ICRA reported that a combination of steady normalization in hospital footfalls and field force operations, due to the relatively lower restrictions imposed by COVID-19, continued traction in acute therapies, and better pricing supported healthy revenue growth across companies.

Going forward, the rating agency stated that the continuation of trends in doctor visits and elective surgeries, as well as the performance of new launches and revenue growth momentum in the acute segment, will be key monitorables.

According to ICRA, emerging markets were the standout performers, with a robust 30.6 percent year-on-year growth in Q2 FY2022.

It went on to say that the sample set’s growth was primarily driven by new launches, a low base, strong demand, and rupee depreciation.

Given the COVID-19-related uncertainties, revenue growth for the sample set in the US market remained muted at 1.9 percent during the second quarter, owing to high single-digit to low teens price erosion and past inventory liquidation, it added.

ICRA highlights that the pharma sector’s outlook remains stable, driven by healthy revenue growth and margins.

It added that it expects the sample set’s capital structure and coverage indicators to remain comfortable despite higher CAPEX and R&D (research and development) expenses given the robust cash levels.

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