Pharma Sector Set Log 8-10% Revenue Growth This Fiscal

New Delhi: After achieving about 10 per cent growth last year, the Indian pharmaceuticals sector is again set to log a revenue growth of 8-10 per cent this fiscal, according to a report on Wednesday.

The report by rating agency Crisil suggested that the growth is supported by healthy exports to regulated markets, recovery in exports to semi-regulated markets, and steady domestic demand.

The resultant improvement in operating leverage along with easing pricing pressure in the US generics market will improve operating margins by 70-80 basis points (bps) to about 22.5 per cent this fiscal. This will be on the back of an increase in margins by 100bps last fiscal.

Continued strong annual cash generation and low financial leverage, will support ‘stable’ credit profiles of players even as companies continue to pursue acquisitions in targeted therapeutic areas.

According to a CRISIL study of 190 drug makers, the sector accounts for about half of the Rs 4.1 lakh crore market last fiscal.

The pharmaceutical sector revenue pie is split almost equally between domestic sales and exports. Domestic formulation revenue comes equally from chronic and acute therapeutic segments.

As for exports, formulations, and bulk drugs contribute about 80 per cent and about 20 per cent, respectively. For formulations, 58 per cent of exports are for the regulated markets and 42 per cent of exports for the semi-regulated markets.