Pharma sector may post 17 per cent revenue growth in June quarter: report

Driven by strong domestic growth and currency tailwinds, the pharmaceutical industry is likely to report a 17 per cent revenue growth in the June quarter, said a report by Edelweiss Securities

The pharmaceutical industry is likely to report a 17 per cent revenue growth in the June quarter, driven by strong domestic growth and currency tailwinds, said a report. “Overall revenue for the pharma sector is likely to grow 17 per cent YoY (year-on-year) and PAT 50 per cent YoY,” says a report by Edelweiss Securities said.

“Domestic sales are likely to spike 26 per cent on the back of a low base due to GST-related disruption,” it added. The US sales in constant currency are expected to grow 6 per cent in annual terms, but fall two per cent in quarterly terms, on lack of any meaningful launch during the June quarter, according to the report.

Currency tailwinds, namely the rupee’s four per cent depreciation against the US dollar and 11 and five per cent fall against the euro and yen, respectively, are likely to drive EBITDA margin expansion of 350 bps in annual terms and 100 bps in quarterly terms in the June quarter, it said. The optimism is on the favourable regulatory environment, says the report.

The US Food and Drug Administration approval rate rebounded to 198 nods after a temporary hiatus in the March quarter, with 109 approvals due to extra documentation requirements for elemental impurities, the report revealed.

Following the recent USFDA clearance of Sun Pharma’s Halol plant, the report said piled-up filings are expected to keep the approval rate buoyant for domestic pharma companies. “On the regulatory front, favourable inspections at Cadila’s topicals plant, Dr Reddy’s Medak, Srikakulam SEZ, UK, and Sun Pharma’s Halol plant demonstrate that the worst in terms of regulatory issues is over,” it said.

Edelweiss Securities, however, said that the pricing challenges in the US still cause of concern. “Though the Q1FY19 results will be seemingly better, we believe underlying growth will remain muted. However, initial signs of rebound in domestic markets is key positive,” it said. The domestic pharmaceutical sector accounts for 3.1-3.6 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms. It is expected to grow to USD 100 billion by 2025, according to the report.

 

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