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.