Indian pharma industry to witness 11% rise in revenues, propelled by domestic and US markets: Sharekhan Report

The Indian pharmaceutical industry is poised for robust growth this fiscal, primarily because of active growth both in India and the US, new product launches, and a healthy product mix, according to the financial services firm, Sharekhan. The firm projects an 11% year-on-year (YoY) revenue increase to Rs 60,202 crore, Ebitda growth of 24% to Rs 14,971 crore, and PAT growth of 43% to Rs 9,174 crore for the industry.

Sharekhan estimates that Ebitda margins for pharmaceutical companies will rise by 252 basis points y-o-y to 24.9%, buoyed by a robust product mix and RM cost rationalisation. The Indian segment of the industry is estimated to grow by 10% to Rs 14,908 crore.

The firm also expects the US segment to register 12% YoY growth, propelled by product launches to Rs 17,451 crore. Top picks within the industry include leaders like Sun Pharma, Dr. Reddy’s, and Cipla, among large caps. Mid-cap favourites are Sanofi, Strides Pharma, and Caplin Point, while Artemis Medicare tops the list among hospital stocks.

The fourth quarter of the fiscal year 2024 alone is expected to yield an impressive 11.4% YoY growth in sales for pharmaceuticals, with demand expected to rise in the chronics segment and new product launches. The Indian region is predicted to see a YoY growth of 10% while the US region is set to grow by 12%, driven by the launch of complex products.

Despite ongoing headwinds such as R&D expenditure and USFDA inspection, Indian pharmaceutical companies are well-positioned to take advantage of growth opportunities due to their global competitiveness and substantial market share.

Sharekhan anticipates the industry will sustain its performance owing to 8-10% growth in the domestic branded business and a focus on complex product launches. The sector forecasts are further bolstered by companies' increasing investment in R&D, with potential medium and long-term growth driven by factors such as rising Loss of Exclusivity (LOE) opportunities, increasing preference towards specialty and complex generics, and emerging opportunities due to the China+1 factor in the Active Pharmaceutical Ingredients (API) space.