Pharma to beat COVID-19 blues: Higher exports to help sector eke out 8-9% growth this fiscal

While the coronavirus pandemic has ravaged Indian economy along with several sectors, the domestic pharmaceutical industry is expected to beat the COVID-19 blues on account of higher exports. “The Rs 2.8 lakh crore Indian pharmaceutical sector is set to emerge more or less unscathed from the Covid-19 pandemic this fiscal. The sector is well-diversified with exports and domestic formulations accounting for almost equal share,” a CRISIL report said on Thursday. The sector is likely to report a 11-12% growth in exports this financial year as against 10% last fiscal and will outpace growth in domestic formulations expected at 5-6%. This will lead to 8-9% overall growth, down just 150 basis points on-year.

While companies watched by CRISIL may report a decline in operating profitability, they will still report healthy profit at nearly 19% despite higher input prices. These 350 companies represent 70% of the sector revenue. 

“India accounted for almost half the abbreviated new drug application, or ANDA, approvals provided by the US FDA since fiscal 2019. This strong pipeline, coupled with lower import alerts and warning letters in recent months, should ensure a steady pace of new launches, which will help sustain export momentum to regulated markets,” Isha Chaudhary, Director, CRISIL Research, said. 

India exports pharmaceuticals to many countries and the export pie is divided into regulated markets such as the United States and Europe at nearly 45%, and the rest of world (ROW) markets at nearly 35%). Out of the total, bulk drugs comprise 20%. Further, export growth is expected to remain strong at 10% and above in each of the segments mentioned above. “The growth in the regulated markets will be supported by steady increase in new product launches from compliant plants, lower pricing pressure on existing generics, and a visible easing in scrutiny by the United States Food and Drug Administration (US FDA) in recent months,” the report said. Meanwhile, higher exports are likely to offset some of the reduction in domestic formulation sales due to coronavirus-led disruptions.