India Ratings and Research (Ind-Ra) in its latest report has said that India’s pharmaceutical sector is expected to grow 3-5 percent year-on-year in the current financial year (FY21) despite lockdown due to coronavirus disease (COVID-19). It also expects monthly revenue improvements of drug firms from June. Additionally, it said the seasonality in the Indian domestic business will support the recovery. Also, it noted that the continuous rise in number of coronavirus cases in the country will result in further volume growth in related therapies.
According to the report, pharma companies' large cash balances and sufficient headroom under debt covenants along with diversified funding sources will mitigate any impact of the ongoing lockdown. It said the COVID-19 impact on the pharmaceutical sector has been less pronounced than observed in other sectors, as it falls under the essential service category and is exempt from restrictions under the nationwide lockdown. It stated that manufacturing volumes after declining to 50-60 percent in April, given the strict lockdown, has improved significantly to 60-80 percent of the original capacities during the May-June period so far.
However, Ind-Ra said the companies have refrained from new launches during the lockdown due to lack of effective marketing campaigns. Further, it said companies may take price hikes on non-DPCO (Drug Price Control Order) products up to 8 percent unlike the earlier average price hike of 5 percent (max limit 10 percent) due to an increase in raw material cost and the additional cost incurred towards raw materials, logistics and manpower.
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