India Pharma Booms: Exports Drive 13% Growth

India's pharmaceutical sector is anticipated to experience robust revenue growth of 11-13% in the current fiscal year, a notable increase from the previous year's 8%. This expansion is primarily driven by a surge in exports, which are projected to grow at 14-16% in rupee terms.

Exports, particularly in formulations (83% of exports), are diversifying beyond traditional markets like the US. Complex generics and biosimilars are boosting presence in Europe, while branded generics and new product launches are accelerating growth across Asia, Africa, and Latin America.

The domestic market is also a significant contributor, expected to grow by 9-11% this fiscal year. This growth is supported by chronic therapies, annual price revisions, and a recovery in volume growth to 4-5%, driven by new launches and deeper penetration into smaller markets.

Despite the positive revenue outlook, operating margins are forecasted to compress by 150-200 basis points to 21-21.5%. This is attributed to cost inflation in raw materials, energy, and freight, exacerbated by geopolitical volatility. However, the sector's credit profiles are expected to remain resilient due to strong cash generation and healthy balance sheets.

Debt-to-EBITDA is projected to stay around 1.2 times, with interest coverage close to 10 times, indicating financial stability amidst margin pressures.