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Rating agency ICRA in its latest report has said that revenue of domestic active pharmaceutical ingredients (API) producing firms is expected to see a 7-8 per cent rise by 2029. It expects the revenues of its sample set of companies to expand at a CAGR of 7-8 per cent between 2023 and 2029, from an estimated size of $13-14 billion in 2023.

According to the report, this will be driven by a steady ramp-up in the pharmaceutical formulations industry, which in turn, will be aided by an increasing geriatric population, higher prevalence of chronic diseases, and rising demand for contract manufacturing with global customers looking to diversify their supply chain along with greater focus on domestic sourcing. It also forecasts the operating profit margin (OPM) of its sample set of companies to improve mildly in FY2025.

The report said domestic API industry players faced considerable volatility in earnings over FY2021-FY2023 on account of multiple headwinds such as rising raw material costs. The production cost went up due to elevated crude oil prices and pandemic-induced lockdowns in China, resulting in a shortage of key starting materials (KSMs) and APIs globally among others. India imported APIs and bulk drugs worth Rs 37,700 crore in FY2024, accounting for 35 per cent of its total API requirement. Imports from China accounted for 70 per cent.