Pharma sector may post 17 percent revenue growth in June quarter: Report

MUMBAI: The pharmaceutical industry is likely to report a 17 percent revenue growth in the June quarter, driven by strong domestic growth and currency tailwinds, said a report.

"Overall revenue for the pharma sector is likely to grow 17 percent YoY (year-on-year) and PAT 50 percent YoY," EdelweissSecurities said in its report.

"Domestic sales are likely to spike 26 percent on the back of a low base due to G ST-related disruption," it added.

The US sales in constant currency is expected to grow 6 percent in annual terms but fall 2 percent in quarterly terms, on lack of any meaningful launch during the June quarter, according to the report.

Currency tailwinds, namely the rupee's 4 percent depreciation against the US dollar and 11 and 5 percent fall against the euro and yen, respectively, are likely to drive EBITDA margin expansion of 350 bps in annual terms and 100 bps in quarterly terms in the June quarter, it said.

Edelweiss Securities said that the optimism is on favourable regulatory environment.

The US Food and Drug Administration (USFDA) approval rate rebounded to 198 nods after a temporary hiatus in the March quarter, with 109 approvals due to extra documentation requirements for elemental impurities, the report revealed.

Following the recent USFDA clearance of Sun Pharma's Halol plant, the report said piled-up filings are expected to keep the approval rate buoyant for domestic pharma companies.

"On the regulatory front, favourable inspections at Cadila's topicals plant, Dr Reddy's Medak, Srikakulam SEZ, UK, and Sun Pharma's Halol plant demonstrate that the worst in terms of regulatory issues is over," it said.

Edelweiss Securities, however, said that the pricing challenges in the US is still cause of concern.

"Though the Q1FY19 results will be seemingly better, we believe underlying growth will remain muted. However, initial signs of rebound in domestic markets is key positive," it said.

The domestic pharmaceutical sector accounts for 3.1-3.6 percent of the global pharmaceutical industry in value terms and 10 percent in volume terms.

It is expected to grow to $100 billion by 2025, according to the report.