Rating agency ICRA in its latest report has said that Indian pharmaceutical industry is likely to grow by 11-13% in the current financial year (FY20) on the back of healthy demand from the domestic market, given increasing spend on healthcare along with improving access. It further mentioned that this along with moderation in pricing pressure for US market, new launches and market share gains for existing products and consolidation benefits will drive growth in FY20.
The growth in FY20 is expected to be supported by 4.2% WPI linked price hike for National List of Essential Medicines (NLEM) portfolio. The credit metrics of leading pharma companies are expected to remain stable in view of future growth prospects in regulated markets and relatively strong balance sheets.
However, the growth will be constrained by regulatory interventions such as price controls, compulsory genericization, and United States Food and Drug Administration (USFDA) oversight for manufacturing deficiencies. According to an ICRA report, covering a sample of 21 firms in the industry, the growth during FY2019 stood at around 12%.
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