The rating agency ICRA in its latest report has said that the growth trajectory for the Indian pharmaceutical industry is likely to be moderate at 7-9 percent in the period between FY18 and FY21, on the back of healthy demand from the domestic market given increasing spend on healthcare along with improving access, though constrained by regulatory interventions and slowing growth from the US given the relatively moderate growth prospects. It pointed out that the concerns in the domestic market pertain to price control and mandatory genericisation whereas US concerns pertain to relatively moderate proportion of large size drugs going off patent, increased competition leading to price erosion albeit at moderate pace, generic adoption reaching saturation levels and regulatory overhang along with base effect catching up.
According to the report, the revenue growth from US remained sluggish during June quarter at 1.5 percent, compared with 4 percent in FY17 and minus 13.1 percent in FY18 despite consolidation benefits. It stated that the growth momentum for US business is likely to remain in low single digit for FY19, led by limited near term first to file (FTF) generic opportunities, pricing pressures and product rationalisation for US base business. It added that the aggregate domestic growth was 27.2 per cent in June quarter, compared with 4.6 per cent in FY18 and minus 8.8 per cent in June quarter last year.
ICRA further expects R&D budgets to remain at 8.6-8.8 percent given the growing focus both on regulated markets and complex molecules/therapy segments such as injectables, inhalers, dermatology, controlled-release substances and bio-similars. It also noted that Indian companies have gained adequate scale and drug development capabilities over last decade of growth which will keep them in good stead to capture new opportunities in the developed market.