Indian pharma sector set for steady growth with 7-9 pc revenue rise this fiscal: Crisil

India's pharmaceutical industry is expected to post revenue growth of 7-9 per cent in the current financial year, supported by steady domestic demand and healthy exports, according to the report. The study by Crisil Market Intelligence and Analytics also projected operating profitability to hold at 22–23 per cent, with strong credit metrics providing stability.

Domestic market to sustain growth

Crisil noted that domestic revenues are likely to expand 7-9 per cent this fiscal, driven by annual price revisions and new product launches. The sector had recorded a stronger 10 per cent growth in the previous year.

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Exports remain a key driver

Revenue is nearly evenly split between domestic and overseas sales. Formulations account for 83 per cent of exports, while bulk drugs make up the rest. Of these, 59 per cent of formulation exports go to regulated markets, with the United States leading the demand.

"Formulation exports to regulated markets should grow 9-11 per cent this fiscal, slower than the 14 per cent achieved over the past two years, mainly due to a high base," said Aniket Dani, Director at Crisil Market Intelligence and Analytics. He added that new launches and continuing shortages of certain medicines in the US would support the growth momentum.

By contrast, exports to semi-regulated markets are expected to rise at a slower pace of 5-7 per cent, weighed down by currency depreciation in some countries and persistent quality concerns.

Global position of Indian generics

Crisil Ratings Director Aditya Jhaver underlined that India continues to play a dominant role in supplying affordable medicines to the US. "The replacement risk for Indian generics in the US remains low as manufacturing capacities there are limited. India still meets over 40 per cent of generic prescriptions," he said.

Policy measures to improve access

The report noted that the government has recently cut taxes on essential medicines. Lifesaving and cancer drugs have been exempted from GST, while the rate on several others has been reduced from 12 per cent to 5 per cent. The move is aimed at making critical treatments more affordable.