Revenue growth of drug firms in current fiscal to be in the range of 7-9%: ICRA

Rating agency ICRA on Friday said it expects revenue growth of some of the leading drugs firms to be in the range of 7-9% in the current fiscal with gradual improvement in the Covid-19 situation in the country.

The growth will be supported by the consistent demand for pharmaceutical products and the low base of FY2021, though some impact on volume growth will be witnessed due to the second wave of Covid-19 2.0 related lockdowns.

“Revenue growth for ICRA sample set (21 companies) is estimated at 7-9% in FY2022 and 8-11% in FY2023, supported by gradual recovery post the initial impact of Covid-19,” Icra Vice President & Sector Head Gaurav Jain said in a statement.

In the current financial year, the sample set is estimated to witness year-on-year growth of 6-8% in domestic market formulations, 5-7% in the US business, and 8-10% in the European business, he added.

The growth for the US and European markets remains sensitive to the depreciation of the INR against the USD/GBP/EUR, Jain noted.

“The credit outlook for the Indian pharmaceutical industry remains stable led by healthy accruals, low leverage levels, and healthy liquidity profile of the pharmaceutical companies. ICRA expects the credit metrics of its sample set of Indian pharmaceutical companies to remain comfortable despite higher capital expenditure and R&D expenses. Furthermore, the liquidity profile of these companies is also expected to remain comfortable,” Jain said.

The rating agency noted that the impact of Covid-19 on the Indian drug firms was relatively limited last fiscal due to consistent demand for pharmaceutical products and resumption of imports of key input materials from China from March 2020 onwards.

The revenue growth for the ICRA sample of 21 companies remained muted at 5.8% in FY202