 "Pharma exports to reach Rs 1.1 lakh cr by FY16: Ind-Ra")
Ind-Ra expects the sector's exports to reach Rs 1,10,000 crore by FY16, although the growth rate will moderate to 10-12% year-on-year, from about 14% in 2013-14 as fewer patents are lined up for expiry.
The pharmaceutical industry continues to benefit from lower cost of research and production which aids manufacturing for exports, the report said.
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Indian manufacturers will face fewer regulatory hurdles in FY16 on strengthened quality and control processes. In 2014, import alerts reduced to eight from 21 in 2013 due to quality measures implemented by companies.
The rating agency has maintained a positive outlook on the pharmaceuticals sector for FY'16 on continued strong export growth expectations backed by better regulatory compliance track record and patent expiry.
Exports growth is likely to be driven by fully operational USFDA facilities, led by restored regulatory approvals. Growth expectation continues to rest on USD 24.4 bn (US sales) drugs which are likely to go off patent by end-2016.
Around 27% of India's pharmaceutical exports were to the US in FY'14 as against 25.5% in FY'13, making it the single largest destination. Ind-Ra expects this position to be maintained in FY'16.
Large pharmaceutical manufacturers will continue to look for in-organic growth opportunities in India and abroad while also expanding organically in FY16. Top-line growth and steady margins will support the capital expansion ensuring the maintenance of comfortable credit metrics, it said.
Ind-Ra said that widespread regulatory actions by overseas regulators could affect exports. Any further sweeping actions including imposing substantial penalties will impact bottom-lines and credit profiles of domestic market players. Highly leveraged acquisitions could stress credit profiles.
It said the success in acquiring marketing exclusivities in the regulated markets and successfully commercialising bio- generic molecules can provide an upward thrust to the sector's earnings and, if used to reduce debt, could benefit individual companies.