Pharma to see moderate growth till FY21

Chennai: The pharma industry will have to wait for the return of double-digit growth as the industry is expected to witness a moderate growth of 8 to 10 per cent till FY21. The pricing pressure in the US generic market will continue to be a concern for the industry.

Between FY11 and FY16, the industry was growing at a healthy 13 per cent as the US market growth for the cumulative period was 19.3 per cent. The pricing pressure in the US generic market started affecting the Indian pharma companies in Q4 of FY17, which led to a de-growth in FY18.

As per the estimate of rating agency ICRA, the industry should have grown by 9 to 10 per cent in FY19, driven by the 8 per cent growth in the US market. The growth trajectory for the industry is likely to be moderate at 8-10 per cent till FY2021, finds ICRA.

"The growth momentum for US business is likely to remain moderate for FY 2020, led by limited near term first to file (FTF) generic opportunities, pricing pressures and product rationalization for US base business. The base business in US continues to face mid-to-high single digit price erosion and regulatory overhang for select companies," said Gaurav Jain, Vice President & Co-Head, ICRA. The emerging markets too remain volatile for the exports.

However, a healthy demand can be expected from the domestic market, given increasing spend on healthcare along with improving access.

The challenging US market conditions characterized by steep pricing pressures, high competitive intensity led by faster ANDA approvals and lower than expected revenue growth also has adversely affected R&D spends. Unlike in the past, when several Indian pharma companies ramped up their R&D spend, targeting pipeline of specialty drugs, niche molecules and complex therapies, this time around companies are optimising their R&D spend.