Margin pressure to persist for pharma companies: ICRA

New Delhi: The growth and profitability of Indian pharmaceutical companies in current financial year will be constrained by regulatory interventions like price controls in the domestic market and compulsory generalization in the overseas market, according to ICRA Ratings.
The investment information firm has forecast the growth trajectory for the pharma industry to remain at 11 to 13 percent in FY20 on the back of healthy demand from the domestic market due to increasing spend on healthcare along with improving access. New launches and market share gains for existing products and consolidation benefits will drive growth.
“But revenues continue to be impacted by price erosion, product rationalization and continued effect of regulatory overhang for certain companies which put supply constraints,” said Gaurav Jain, Vice President and Co-Head of Corporate Ratings at ICRA.
The revenue growth for the Indian pharmaceutical industry in Q1 FY20 stood at 12.4 percent supported by US and Europe markets. The US market grew by 19.8 percent led by new product launches, few limited competition products, moderation in pricing pressure and market share gains.
However, faster generic approvals and continued regulatory overhang with respect to manufacturing quality deficiencies highlighted during the US Food and Drug Administration (USFDA) audits remains key concern. The pace of abbreviated new drug application (ANDA) approvals has increased by 44 percent during the 2015-18 period, leading to higher competitive intensity.
But the pace of official action post USFDA audit has also increased from January to August this year with 11 warning letters compared to 7 last year.