Jun 28, 2004|
Indian Pharma: Prospects for FY05?
FY05 was good year for the Indian pharma industry as a whole. The year was good for the top and the medium rung players who saw surge in their export revenue driven by bulk drugs exports. The consolidated data for the FY04 is not available but looking at the top and middle rung companies, FY04 has been an eventful year. Now the first quarter of the current year is coming to a close. Consider what lies ahead for FY05.
In the domestic market, it seems that the life style segments such as cardiovascular, anti-diabetes, anti-ulcer and anti-depressants will continue to remain key growth drivers in FY05 as well. Anti-infectives and anti-inflammatory, we believe, will continue to lag. Companies such as Nicholas Piramal and Cipla, which have high exposure in the fast growing segments, will benefit the most. The growth will also depend on the ability of companies to launch new drugs and the pricing ability in an extremely competitive market. Not much is expected from the MNC companies this year too on new launches front. MNC pharma companies also seem to do well in the high growth market, but lack of new product introductions might hamper growth. Although Aventis is aggressively launching new products, other MNC companies are waiting for the patent regime.
Although the domestic markets will grow at a steady rate of 10% to 11%, the growth in topline of Indian companies is likely to faster than MNC majors, owing to their international expansion plan. The commencement of contract manufacturing agreements that were signed recently will propel growth this year. Also, on the bulk drugs front, companies will continue to show robust performance in light of the cost competitiveness of Indian bulk drugs manufacturers.
Companies like Ranbaxy, Dr Reddy's, Sun and Wockhardt will continue to explore markets in Europe and US for the generics drugs. Ranbaxy is likely to close this year in the US market with revenues of US$ 475 m (43% of FY05 sales). Although the revenue growth may not translate into increased profitability, it is likely to be lucrative over the long-term.
Financial year 2005 holds promise for the pharma industry, both on the domestic and international fronts. The last quarter of the year could see the Indian pharma moving into the product patent regime. Although, it will not result in any perceptible change in the short run, it holds relevance for the industry structure in the long run.
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