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Maintaining a neutral outlook for the pharmaceuticals sector for FY25, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report is expecting pharmaceuticals companies to continue to benefit from growth in the domestic as well as export markets, while maintaining healthy EBITDA margins led by a moderation in the price erosion in the US generics business, softening of input costs, and high-value product launches in the US generic market. 

According to report named ‘FY25 Pharmaceuticals Outlook: Moving Up the Value Chain; Sustainable Margins in Sight’, the Indian pharmaceuticals market (IPM) is likely to grow 8%-9% year on year (yoy) in FY25 (FY24: 6%-7% yoy; FY23: 9.3% yoy). It further expects its US-focused pharma issuers to remain stable or report mid-to single-digit revenue growth in FY25 (FY23: 7.2% yoy; 9MFY24: 18.5% yoy) on account of lack of revenue from one-off products. Hence, the overall proportion of sales from the US is likely to remain stable. 

The report further noted that the active pharmaceuticals ingredients (API) business of Ind-Ra selected companies is expected to report high single-digit growth in FY25 due to a demand uptick. The overall revenue growth for them is also expected at around 9% yoy while maintaining healthy EBITDA margin performance (around 22%) in FY25. It also said that there has recently been a wave of M&A activity in the domestic formulations space, which is likely to continue.