CARE Research has recently released its quarterly growth trajectory report on CRAMS and monthly report on the pharmaceutical sector analysing the shift towards chronic therapeutic areas, considered a key to value growth.
CARE Research expects the Indian pharma industry to continue to show robust growth, driven by increasing export opportunities arising from the US market. The report estimates that the Contract Manufacturing Operations (CMO) segment would continue to grow and drive the growth for the overall CRAMS segment foreseeing the future generic market buoyancy.
Also, the Contract Research Operation (CRO) segment would witness rise in the growth levels but the ongoing global economic crisis will have an impact in the short term.
Blockbuster drugs worth US $100 billion are set to go off patent over next five years in US, hence enhancing the demand for generic products. On the domestic front, the growth is likely to be driven by increasing per capita income, shift in disease profile from acute to lifestyle related diseases and huge potential for expanding health insurance penetration in the country. However, all eyes are set on the upcoming National Pharmaceutical Pricing Policy (NPPP), which will decide the extent of value growth in the industry and margins of premium players.
Globally pharma companies have received 36 Abbreviated New Drug Application (ANDA) approvals and 11 tentative approvals from US Food and Drug Administration (USFDA) in October 2012. Of these, Indian pharma companies have received 11 ANDA approvals and six tentative approvals.
As per research analysed by the CARE Research team, in Q2FY13 the net sales of the 10 pharma companies increased by 29.2 per cent y-o-y, driven by robust revenue growth from the regulated markets of US and Europe. Also, the demand from domestic and rest of the world (RoW) markets grew significantly in Q2FY13. The aggregate PBDIT margin of all the 10 companies expanded by 125 bps y-o-y to 24.4 per cent in Q2FY13, on the back of improved operating performance of major pharma companies. PAT margin too, improved by 668 bps y-o-y to 16.8 per cent in Q2FY13, on the back of FOREX gain, decline in depreciation and interest cost.
The growth in the Indian CRAMS industry looks promising given the confidence of global innovator companies towards India, coupled with increasing R&D costs, margin pressure and patent expiry of major blockbuster drugs. Net sales of six CRAMS companies analysed by CARE Research increased by 26.5 per cent y-o-y in Q2FY13, helped by favourable currency movement. PBDIT margin of all the six companies combined improved by 103 bps y-o-y to 19.9 per cent in Q2FY13, on the back of improved operating performance of the major CRAMS companies. Profit after tax of all the six companies decreased by 4.7 per cent y-o-y in Q2FY13 on account of higher depreciation and interest cost.
EP News Bureau – Mumbai