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Maintaining a neutral outlook for the Indian pharmaceutical sector for FY24, credit rating agency, Ic and Research (Ind-Ra) has said that the Indian pharmaceuticals market (IPM) is likely to grow 10%-11% year on year (yoy) in FY24 (FY22: 14.5% yoy; FY23: 9.3% yoy).

The agency also expects a muted performance in the US generic market due to a high single-digit price deflation (9MFY23 and FY22: high single digit to low double digit). As per the agency, the Indian active pharmaceuticals ingredient (API) suppliers witnessed weak growth of negative 8.1% yoy in FY22 (FY21: 19.2% yoy), due to inventory destocking and high base last year, while a recovery was seen in 9MFY23 (up 5.6% yoy).

Ind-Ra further noted that the API business of selected companies is expected to report high single-digit growth in FY24 due to a demand uptick; the overall revenue growth for them is also expected at 9%-10% yoy, given their optimised operating costs, a moderation in the US price erosion, a softening of raw material and other cost (logistic/freight). This will lead to a healthy EBITDA margin performance (around 21%) in FY24 (FY22: 20.1; FY21: 23.0%; 9MFY23: 20.3%).c