Pharma sector may post single-digit growth in FY18-20

Although demand prospect for the domestic pharmaceutical market is expected to remain healthy, slowing growth from the US, increased competition, among others, are likely to keep it’s revenue growth to single digits, between 7-10%, during financial year 2017-18 to 2019-20, a report said. This is after mid-tohigh double digit growth over last five years. Growth trajectory for the pharmaceutical industry is likely to be moderate, in single digit, according to rating agency Icra, on the back of slowing growth from the US given the relatively moderate proportion of large-size drugs going off patent and increased competition leading to price erosion in low double digit.

Generic adoption reaching saturation levels and regulatory overhang along with base effect catching up were also cited as the major challenges impacting growth. The agency said while the demand prospects from domestic market are likely to remain healthy given increasing spend on healthcare along with improving access, regulatory interventions, especially relating to price control and mandatory genericisation remain a concern.

Icra said the revenue growth from the US during FY12-17 period witnessed a CAGR of 19.3%, though the growth came down from 14.4% in FY16 to 4% in FY17 and the trailing 12 months growth is 16.2%, despite consolidation benefits.

Gaurav Jain, vice-president, Icra said the growth momentum is likely to face further pressures going forward, led by limited near term first to file (FTF) generic opportunities, pricing pressures and product rationalisation for US base business. “Besides increased regulatory scrutiny along with sustained investments in R&D will also have an impact on profitability of domestic pharmaceutical companies,” he added.

MUMBAI: SLOWING GROWTH FROM U.S., INCREASED COMPETITION LIKELY TO KEEP REVENUE GROWTH BETWEEN 710%: ICRA