According to a report, good growth is expected in the Indian pharma sector due to improvement in domestic demand and CDMO/API segment. However, margins may remain under pressure due to decline in US business and rising costs. The growing opportunities in GLP-1 therapy will be important.
New Delhi [भारत]July 18 (ANI): According to a report by 360 One Capital, the Indian pharmaceutical sector is expected to maintain a healthy growth path in the coming quarters. This will be supported by sustained domestic demand, recovery in activity in the contract development and manufacturing organization/active pharmaceutical ingredient (CDMO/API) segment and growing opportunities in GLP-1 therapy. However, US businesses remain under pressure and input-cost risks remain.
Revenue and Margin Estimates
The brokerage expects the sector to register 10 per cent year-on-year revenue growth in Q1FY27, with the domestic and CDMO/API segments growing at 12.7 per cent and 9.9 per cent, respectively. However, US business is expected to decline 9.3 percent due to a high base due to Revlimid-related sales. EBITDA margin is expected to decline 125 basis points to 24.6 percent as higher freight, power and input costs weigh on profits.
Strength will come from the domestic market
The domestic market is expected to reach “a healthy annual growth of 12.7% to Rs 272 billion”, the report said. This growth will be driven by the growing GLP-1 segment, new product launches, shift towards complex generics, improved medical representative productivity, increased pricing and in-licensing of brands.
CDMO/API segment will remain the growth engine
The CDMO/API segment is likely to remain a major growth engine. The report estimates a “solid annual growth of 9.9 per cent to Rs 89 billion” on the back of increasing inquiries for quotations and proposals from global companies and a healthy order book. It also said that Indian CDMO companies are also benefiting from a strong structural capex cycle and investments in differentiated capabilities such as peptides, ADCs and highly potent APIs.
Uncertainty regarding GLP-1
Several companies involved in the fast-growing GLP-1 opportunity have also been affected, with Dr. Reddy’s Laboratories discontinuing commercial supplies of its generic semaglutide injection after discovering quality issues related to the API. This has increased near-term uncertainty regarding product launches and manufacturing timelines. The report said the issue was related to some batches being out of specification during commercial scale-up, while the restart of semaglutide manufacturing remains a key monitoring issue.
Hope for long term recovery
“CRAMS/API companies are poised to grow structurally,” the report said, adding that US-focused companies are also expected to gradually recover as the business environment stabilizes. In the longer term, improved macroeconomic conditions, strong growth prospects and increasing merger and acquisition activity are expected to support the sector’s recovery. (ANI)
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