Business

Indian pharma sector set for a turnaround

Booster dose: With several measures and improvement in exports, growth seems to be coming back.  

The Indian pharmaceutical industry, after facing a tough time last year, is headed for a turnaround in FY19. The sector’s year-on-year revenue growth was coming back on track, as per an EY presentation at a recent CPhI CEO Roundtable 2018.

The industry, estimated at $33 billion in 2017, was facing steep headwinds on account of lower generic opportunities, rising competition, supplier consolidation and increase in regulatory alerts for Indian pharmaceutical firms, it said.

But, with several corrective measures and improvement in exports, growth seems to be coming back.

The growth, which was 8.3% negative in the first quarter of FY18, turned positive (7.4%) in the fourth quarter of FY18. And the sector’s EBITDA, which was 14% negative in FY18, is expected to rise to 21% in FY19.

“The sector’s operating income and operating profit are expected to see a course reversal,” the presentation said. As per the CPhI Annual Industry Report 2018, India, followed by the U.S. and China, has the fastest growth potential. Key drivers are the high growth domestic market and expansion of pharma exports, the report said. As per the report, India ranked sixth in innovation. The top three are U.S., Japan and Germany while China ranks tenth.

Third in competitiveness

In competitiveness, India ranks third. The top two are U.S. and Germany. In reputation ranking, India is sixth, while China ranks tenth.

U.S., Germany and Japan fill the top slots here.

The report said that in 2018, both India and China made huge strides, improving their perceptions over 2017. “This probably reflects an easing of negative news around Indian manufacturing and China’s considerable effort to improve quality,” the report said.

At the roundtable organised by UBM at CPhI & P-MEC India expo, CEOs had expressed concern about multiple compliance issues affecting their innovations.

Cost effective

However, they felt India’s strong innovation capabilities aided partnerships and that cost advantages would help in overcoming this problem. The cost of manufacturing formulations in India remained 30-40% lower than other comparative manufacturing hubs such as China and Eastern Europe, notwithstanding low productivity levels.

The global pharmaceutical market stood at $934.8 billion in 2017 and will reach $1.17 trillion in 2021.

India is the largest provider of generic drugs globally and caters to over 50% of global demand for various vaccines, 40% of generic demand in the U.S., and 25% of all medicines in the U.K.


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Printable version | Jan 17, 2022 7:02:31 PM | https://www.thehindu.com/business/indian-pharma-sector-set-for-a-turnaround/article25808419.ece

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