Pharma Industry Revenue Growth Driven by Domestic Formulations and US Launches
The pharmaceutical industry is set to experience an 8.5% year-on-year (YoY) revenue growth, driven by domestic formulations and niche launches in the US market, according to a report by Axis Securities. Companies are expected to see a 3.1% quarter-on-quarter (QoQ) growth for the second quarter of FY25. EBITDA is projected to increase by 10.5% YoY and 3.8% QoQ, while adjusted Profit After Tax (PAT) is anticipated to grow by 14% YoY and 1% QoQ.
The Indian market is showing signs of recovery, with strong performance in chronic therapies and a resurgence in acute therapies. Dr. Reddy’s, Cipla, and Aurobindo are expected to report significant gRevlimid sales for Q2 FY25. An improvement in margins by 40 basis points YoY is expected, thanks to a favorable domestic formulations business, stable freight costs, consistent Active Pharmaceutical Ingredient (API) prices, and a better product mix.
API price improvements are driven by volume growth and supply checks from China. Additionally, decreased crude prices and stabilized shipping rates in Q2 FY25 are likely to help maintain margins for pharmaceutical companies.
In the healthcare sector, a 9.4% YoY and 4.5% QoQ revenue growth is predicted, mainly due to improved occupancy rates and a 5-6% growth in Average Revenue Per Occupied Bed (ARPOB). Companies like KIMS and HCG are projected to achieve 12% YoY growth. However, Medanta may face challenges due to a slowdown in its Lucknow facility, with a 10% decline in occupancies expected.
Overall, a moderate 5% YoY revenue growth is anticipated, supported by the mature hospital in Gurgaon. Profitability is expected to see a 10.8% YoY and 7.4% QoQ adjusted EBITDA growth for the hospital coverage.
Doubts Revealed
Pharma Industry -: The pharma industry refers to companies that make medicines and drugs to help people stay healthy or get better when they are sick.
Domestic Formulations -: Domestic formulations are medicines that are made and sold within a country, in this case, India.
US Launches -: US launches refer to the introduction of new medicines or drugs in the United States market.
EBITDA -: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a way to measure how much money a company makes before paying for certain expenses.
Dr. Reddy’s, Cipla, Aurobindo -: These are names of big pharmaceutical companies in India that make and sell medicines.
gRevlimid -: gRevlimid is a generic version of a medicine called Revlimid, used to treat certain types of cancer.
API -: API stands for Active Pharmaceutical Ingredient, which is the main part of a medicine that makes it work.
KIMS and HCG -: KIMS (Krishna Institute of Medical Sciences) and HCG (Healthcare Global Enterprises) are healthcare companies in India that run hospitals and provide medical services.
Medanta -: Medanta is a large hospital in India known for providing advanced medical care.
Lucknow facility -: The Lucknow facility refers to a branch or location of Medanta hospital in the city of Lucknow, India.
