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March 01, 2019

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

 

Niche and specialty product pipeline to aid exports growth over next five years

 

Blockbuster drugs going off patent and marketing exclusivity aided the growth for the Indian exports formulation players during 2011-12 to 2015-16. However, regulatory woes, wholesale consolidation in US market and rising competition substantially impacted 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 launches by large players in the conventional generics segment. Though pricing pressure in the base business is expected to continue in the US market, it is expected to be less severe from 2019 onwards. Competitive intensity in the US market has peaked out in 2017 and the situation is seen improving.

 

Though exports growth is expected to slowdown, revenue from exports markets for Indian players is expected to grow at a faster rate, as large players are looking to develop capabilities in specialty and biosimilar segment through inorganic route. The export growth in semi-regulated markets would also improve slightly as players look at new markets with low avenues for growth in regulated markets.    

 

Domestic market growth to improve over medium term

 

After registering a healthy ~14% CAGR during FY08 to FY13, domestic market growth slowed down to ~10% CAGR during FY13-FY18 on account of pricing regulations from 2013-14 onwards. NLEM (2015) primarily impacted the growth for the fast growing chronic segment, as large number of cancer related drugs were included under the NLEM. Going forward, CRISIL Research expects the domestic industry to register growth of 12-13% as rising lifestyle-related diseases and expansion in healthcare penetration due to Ayushman Bharat would boost volume growth. However, the government is likely to continue to keep a hold on pricing. The chronic segment would see faster growth than the acute segment. However, high numbers of cancer related drugs being introduced under NLEM would offset an incremental growth in the segment.