Exports, domestic demand to drive pharma revenue growth: SME Tracker

The pharmaceuticals sector is expected to get a shot in the arm this financial year from robust export demand from regulated and semi-regulated markets on the back of drug shortages in the US and European countries as well as new product launches.  

Domestic revenue is expected to be moderate, driven by price growth and new product launches, while volume growth for existing products is likely to remain muted. This augurs well for small and medium enterprises (SMEs), which account for 35-40% of the industry’s revenue. 

SMEs manufacture and market formulations based on less complex molecules, given their higher exposure to generic products. They benefit from operating across the value chain and as contract manufacturers for large players. 

 

The segment is estimated to have grown 6-8 per cent in FY24. The Ahmedabad and Mumbai SME clusters grew at a healthy pace, supported by exports, whereas the Indore and Chennai clusters were supported by moderate domestic demand. This fiscal, the segment is expected to grow 7-9 per cent, led by export demand, which accounts for 50 per cent of industry revenue. Domestic demand is also likely to maintain its growth momentum. 

The domestic pharmaceuticals market grew 7% on-year between April and October 2024, on account of an increase in prices and new launches. Select therapies – cardiac, gastrointestinal, anti-diabetic, neuro and derma, among others – provided support. Over the medium to long term, the PLI scheme for the pharma sector is expected to boost domestic manufacturing and cut import dependency for bulk drugs.