R&D growth in pharma firms like Cipla, Dr Reddy's outpaces revenue growth

Domestic pharma majors are betting big on R&D to drive future growth

Domestic pharmaceutical companies are increasingly focusing on research and development (R&D) to create a robust product pipeline that would drive future growth. Analysis of the past four years' numbers shows that the growth rate of R&D expenditure has consistently outpaced the operating income growth. 

Gaurav Jain, vice-president and co-head, corporate sector ratings, ICRA, said that for the leading seven companies they track (Cipla, Dr Reddy's Laboratories, Lupin, Aurobindo, Cadila Healthcare (Zydus), Sun Pharmaceuticals, and Glenmark) the growth rate in R&D spend has been more than the growth rate in operating income. (Refer chart) Jain added that overall R&D spend includes