NewsPharmaceutical Sector Poised for Growth Despite Export Challenges

Pharmaceutical Sector Poised for Growth Despite Export Challenges

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In the current fiscal year, the pharmaceutical sector is anticipated to witness a boost in revenue, propelled by robust domestic demand and exports to regulated markets. While export demand from semi-regulated markets faces challenges due to currency volatility, low forex reserves, and geopolitical risks, the overall outlook remains positive for the industry.

Small and medium enterprises (SMEs) are expected to play a significant role, accounting for a substantial 35-40 percent share in industry revenue. These SMEs, often engaged in the manufacturing and marketing of formulations based on less complex molecules, stand to benefit from their higher exposure to generic products. Their presence across the value chain and role as contract manufacturers for larger players further contribute to their favorable position.

During the last financial year, SMEs in the pharmaceutical sector experienced growth in the range of 7-9 percent, with the exports segment notably contributing to the success of clusters in Ahmedabad and Mumbai. Higher domestic demand similarly buoyed the Indore and Chennai clusters. In the current fiscal year, these entities are expected to achieve growth rates between 9-11 percent, primarily driven by increasing domestic demand. The recovery in exports, constituting 50 percent of industry revenue, is also anticipated.

The domestic pharmaceutical market exhibited a moderate growth rate of 2.9 percent year-on-year in November. This growth, influenced by a high base and a slower increase in price and new launches, found support in key therapies such as analgesics, anti-infectives, and respiratory therapies.

Looking ahead, the Production Linked Incentive (PLI) scheme for the pharmaceutical sector is anticipated to play a pivotal role in boosting domestic manufacturing and reducing import dependency for bulk drugs. This scheme holds the potential to assist SMEs in diversifying their portfolios and enhancing export growth over the medium term.

Despite challenges in certain export markets, the pharmaceutical sector’s resilience, driven by domestic demand and strategic government initiatives, positions it favorably for sustained growth in the current fiscal year and beyond.

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