Domestic pharma industry likely to touch $57 billion by FY25: Report

New Delhi, July 10 (KNN) The Indian pharmaceutical industry is expected to touch USD 57 billion by FY25, according to a report by CareEdge Ratings.

During FY18 to FY23, the Indian pharmaceutical industry has logged a compound annual growth rate (CAGR) of 6-8 per cent, primarily driven by an 8 per cent increase in exports and a 6 per cent rise in the domestic market.

In FY23, the Indian pharma market saw a year-on-year growth of nearly 5 per cent, reaching USD 49.78 billion. While exports grew a modest 3 per cent, the domestic market increased 7 per cent year-on-year.
The report pointed out that among the export markets, emerging markets remained relatively flat, while developed markets recorded an 8 per cent growth in FY23. Exports to emerging markets were affected by the Russia-Ukraine conflict, scarcity of foreign currency in several African countries, and significant depreciation of local currencies.

Despite facing pricing pressures in the US generics market, formulation companies managed to maintain their margins at around 22 per cent in FY23. This was largely because of their focus on complex and specialty products. On the other hand, operating margins of APIs/bulk drugs companies contracted nearly 170 bps year-on-year, reaching approximately 18 per cent in FY23, the report said.

CareEdge ratings expects the pharmaceutical industry to grow at 7-8 per cent in FY24-FY25, supported by a 6-7 per cent growth in exports and an 8-9 per cent  growth in the domestic market during the same period.

“With the stabilisation of raw material prices, freight rates, and easing of pricing pressure in US generics market along with a focus on complex and speciality products, CareEdge Ratings expects the operating margin of industry players to improve by 100-150 bps over FY24-FY25 compared to FY23," it added.

Krunal Modi, associate director at CareEdge Ratings said, “ The Indian pharma sector is expected to grow at a steady pace in the medium term due to structural factors such as ageing of the population, rising lifestyle or chronic diseases, healthcare awareness and insurance penetration apart from increasing government spending under various schemes.”

“Further, changing world demography along with complex and specialty generic products are expected to drive the export growth of Indian pharma companies. The export growth would also be supported by patent expiry in regulated markets", he said.
KNN Bureau