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 Revenue growth of India's pharmaceutical sector is expected to "moderate" to 9 per cent in FY22, as compared with a healthy rise of 12.5 per cent during the previous fiscal, Crisil said.

The agency attributed slower growth in exports, weak support from Covid-19 vaccine opportunities, and a slow pick-up in demand in the domestic formulations market as some of the reasons behind the possible degrowth.

"Operating profitability will shrink, too, by as much as 300 basis points this fiscal, due to a sharp increase in input and other costs. Well-managed balance sheets and prudent capital spends will, however, help keep credit quality 'stable'."

"Exports have been sluggish because of intense competition among generic players amid intensifying pricing pressure in the US market and lower visibility of new product launches due to delay in closure of regulatory actions on manufacturing plants by the US Food and Drug Administration (US FDA)."

On the other hand, domestic demand is witnessing a steady recovery after tepid performance last fiscal, said Isha Chaudhary, Director at Crisil Research.

"With normalcy returning to healthcare delivery services, domestic formulations revenue, led by acute therapies, is estimated to grow 14-16 per cent this fiscal, compared with 2 per cent last fiscal. Further, with ramped-up capacities and improving pace of vaccination, Covid-19 vaccines also provide additional domestic growth potential this fiscal," Chaudhury said.