New Delhi, August 13 (Language) Rating agency Icra said on Monday that domestic active pharmaceutical ingredient producing companies are expected to see a growth of 7-8 percent in revenue by 2029.
The rating agency expects revenues of its sample companies to grow at a CAGR of 7-8 percent between 2023 and 2029, from an estimated size of US$13-14 billion in 2023.
It also estimates that there will be a marginal improvement in the operating profit margin (OPM) of its sample set of companies in FY2025. Domestic API industry players faced considerable volatility in earnings during FY 2021-2023 due to multiple constraints such as rising raw material costs.
ICRA said production costs increased due to high crude oil prices and the pandemic-induced lockdown in China, resulting in shortage of key starting materials (KSM) and APIs globally.
“Given the subsequent relaxation of many of these constraints, ICRA expects revenues of its sample set of companies to grow by 7-8 per cent in FY2025, 3-3 per cent in FY2024,” said ICRA Vice President and Sectors. There will be an estimated increase of 5 percent.” said Deepak Jotwani, head of corporate ratings.
However, the impact on supply chains and freight costs due to weak demand from some key export markets such as Europe and tensions in the Red Sea will continue to be monitored, he said.
India imported APIs and bulk drugs adequate Rs 37,700 crore in FY2024, which is 35 percent of its total API requirement. ICRA said that imports from China are 70 percent.
