India’s pharmaceutical sector revenue is projected to grow 11–13% this fiscal year, although rising raw-material, energy and freight costs are expected to pressure margins, according to Crisil Ratings.
The projected growth compares with 8% in the previous fiscal year and is expected to be driven by faster exports and stronger domestic demand.
Crisil expects operating margins to moderate by 150–200 basis points to 21–21.5% due to cost inflation in raw materials, energy and freight.
The analysis covers nearly 190 Crisil-rated pharmaceutical companies that accounted for about half of sector revenue last fiscal year.
Exports are projected to grow 14–16% in rupee terms. Formulations account for about 83% of exports, with 57% going to regulated markets and the remainder to semi-regulated markets.
Crisil Intelligence Director Sehul Bhatt said export growth is broadening beyond the US, with complex generics and biosimilars supporting Europe and branded generics and new launches contributing across Asia, Africa and Latin America.
Domestic revenue is expected to expand 9–11%, supported by chronic therapies, annual price revisions of 5–6% and volume growth recovering to 4–5%.
Despite margin pressure, Crisil expects strong cash generation, liquidity and healthy balance sheets to support credit profiles.
