Published on February 25, 2014
India is already among the top six producers of pharmaceuticals of the world. The Government of India had announced a host of measures to create a facilitating environment for the Indian pharmaceutical industry. The policies of the Government of India are aimed at building more hospitals, boosting local access to healthcare, improving the quality of medical training, increasing public expenditure on healthcare to 2-3% of GDP, up from the current level of 1%. Simultaneously, the growth in healthcare insurance industry in India is also expected to harmonize the overall growth in the pharmaceutical market.
The intrinsic strengths of the Indian pharmaceutical sector had kept the foreign investors interested in the domestic market. According to the research analyst, the pharma exports from India will be more than the size of the domestic sales by FY15. India Ratings & Research had improved the outlook on the pharmaceuticals sector for next fiscal to positive from stable on the back of increased exports.
India permits 100% investment in the pharma sector through automatic approval route in the new projects, however, the investment in the existing projects have agreed to post securing an approval from the Foreign Investment Promotion Board. As per market experts, foreign investors will continue to invest in the Indian market and would be looking for growth opportunities in both organic and inorganic. Market players believe that the credit profiles of pharmaceutical companies will reinforce even further due to escalating revenue and improving margins on increased exports.
The pharma sector is expected to continue growing at the same rate in the middle term. As a percent of health care expenditures, in 2012 the pharmaceutical sales were 22.6% and market analyst expect that the sale of pharmaceutical will reach 23.6% and 27% by 2016, as stated by research report. The pharma exports of India in 2012-13 stood at USD 14.7 billion recording a growth rate of 11% and by 2016, India plans to increase its total exports to USD 25 billion. As per the market research analyst, the domestic pharma market is projected to see high single digit revenue growth and profit margins are expected to improve due to increase in utilisation of manufacturing facilities. Nearly all the domestic pharmaceutical companies are carrying at least a stable rating as most of the optimistic factors are working in support of the Indian companies.
