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September 01, 2018

Sector Report: Pharmaceuticals

This report is available to users in India for ₹40,000 + applicable taxes

 

Table of Contents

 

  • Summary
  • Long-term export potential
  • Scenario & medium term outlook
  • Key growth drivers
  • Market Size and Outlook
  • Key growth drivers
  • Scenario and Outlook
  • Profitability

 

Summary

 

Formulation exports growth to continue to remain in single digits over nextfive years

 

Blockbuster drugs going off patent and marketing exclusivity aided the growth for the Indian exports formulation players during2011-12 to 2015-16. However, regulatory woes, wholesale consolidation in US market and rising competition substantiallyimpacted the formulation exports players in 2016-17 and 2017-18, leading to a flat growth during the fiscal.

 

Going forward, CRISIL Research expects the growth to recover to 6-6.5% CAGR during FY18 to FY23, aided by new launchesby large players in the conventional generics segment. Though pricing pressure in the base business is expected to continue inthe US market, it is expected to be less severe from 2019 onwards. Though exports growth is expected to slowdown, revenuefrom exports markets for Indian players is expected to grow at a faster rate of 10% CAGR, as large players are looking todevelop capabilities in specialty and biosimilar segment through inorganic route. The export growth in semi-regulated marketswould also improve slightly as players look at new markets with low avenues for growth in regulated markets.

 

Domestic market growth to remain range-bound over medium term

 

After registering a healthy ~14% CAGR during FY08 to FY13, domestic market growth slowed down to ~10% CAGR duringFY13-FY18 on account of pricing regulations from 2013-14 onwards. NLEM (2015) primarily impacted the growth for the fastgrowing chronic segment, as large number of cancer related drugs were included under the NLEM. Going forward, CRISILResearch expects the growth to normalize and remain range-bound at 11-11.5% CAGR, as Government is likely to continue tokeep a hold on pricing. Although the chronic segment would be a key driver in the strong volume growth, high numbers ofcancer related drugs being introduced under NLEM would offset an incremental growth in the segment. Further, risinghealthcare demand in the country as indicated by rising healthcare insurance and overall per capita health expenditure willcontinue to drive growth for domestic market.