Home  >  TopNews
Msc_Apr23 Advertisement
you can get e-magazine links on WhatsApp. Click here
Export & Import + Font Resize -

Exports to grow 7-9% this fiscal backed by lower price erosion & new product launches in US: CRISIL Ratings

Our Bureau, New Delhi
Friday, May 26, 2023, 08:00 Hrs  [IST]

Backed by lower price erosion of existing products and higher number of new product launches in the US, and steady demand from the rest of the world (RoW, includes semi-regulated and regulated countries excluding US), export of formulations by domestic pharmaceutical companies is likely to grow 7-9% in fiscal year 2024, according to the rating agency CRISIL Ratings. Revival in US sales and sustained healthy performance in the rest of the world will drive growth, it said.

Formulation exports typically contribute about half of the total revenue of domestic pharmaceutical players, with sales to the US and RoW contributing almost equally. In the fiscal year 2023, formulation exports grew 10-12%, aided by depreciation in the Indian rupee and a lower base. Growth was reported in mid-single digits during fiscals 2021 and 2022 due to stiff pricing pressure in the US and delay in new product launches.

A CRISIL Ratings study of around 180 pharmaceutical companies, which accounted for half of the estimated Rs. 3.8 lakh crore annual revenue of the sector in fiscal 2023, indicates as much.

Manufacturing facilities of domestic companies catering to the US market need to be US Food and Drug Administration (FDA) compliant and periodic inspections undertaken by the US drug regulator not only serve the purpose of certifying new facilities but also clear any previously issued official action initiated (OAI1) status for plants, thereby paving the way for new launches.

Anuj Sethi, senior director, CRISIL Ratings says, “Increased inspections by US FDA after the pandemic and higher withdrawals of abbreviated new drug applications due to intense competition are leading to moderation in overall supply of existing drugs. Consequently, the double-digit price erosion witnessed in the US generics market during the past couple of years should stabilise at high single-digits this fiscal.”

To also increase exports, large pharmaceutical companies are developing higher-margin complex/specialty drugs and introducing new generics which have only recently gone off patent and where competition is moderate. Thus, US formulation exports may grow 6-8% this fiscal after an extended period of underperformance.

“We also expect domestic pharmaceutical companies should be able to register 8-10% growth in revenues from RoW markets, this fiscal. Apart from the US, sales to RoW markets also remain integral to the global strategy of domestic players. Increasingly, pharmaceutical companies are venturing into tender-based, institutional sales and enhancing marketing channels across the globe,” added Sethi.

Domestic pharmaceutical companies are also expanding into new semi- regulated geographies, with focus on increased market penetration and faster new product launches given less stringent regulatory requirements. However, domestic companies may not be aggressive in driving growth in select markets such as Latin America, due to high currency volatility and geopolitical risks.

Aditya Jhaver, director, CRISIL Ratings says, “Focus on RoW markets increased substantially over the past few years, mainly to de-risk dependence on the US market and enhance geographical presence. Ergo, contribution of RoW markets to overall formulation exports is expected at around 50% this fiscal, from around 44% in fiscal 2020, as revenue growth in these markets continues to outpace US.”

Better volume growth in formulation exports, and softening price erosion should also help stabilize operating profitability for Indian pharmaceutical players at 20-21% in fiscal 2024 after two consecutive years of margin moderation. Credit risk profiles will remain supported by strong balance sheets and healthy liquid surpluses, added the rating agency.

However, any unanticipated increase in litigation costs in ongoing US antitrust suits, sizable debt-funded acquisitions, adverse regulatory developments such as increased US FDA OAIs will remain key monitorables, it added.


* Name :     
* Email :    
  Website :  
Copyright © 2016 Saffron Media Pvt. Ltd |