“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,” Icra said in a statement.
It also forecasts the operating profit margin (OPM) of its sample set of companies to improve mildly in FY2025, it added.
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, Icra said.
“Given the subsequent remission in many of these headwinds, ICRA expects revenues of its sample set of companies to grow by 7-8 per cent in FY2025, post an estimated increase of 3-5 per cent in FY2024,” Icra Vice President & Sector Head – Corporate Ratings Deepak Jotwani said. However, the impact of subdued demand from some key export markets such as Europe and tensions in the Red Sea impacting supply chain and freight costs will continue to be monitored, he added.
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, Icra stated.
