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India’s API industry expected to grow 7-8% in FY25
Industry News- Aug 13,24
The operating profit margin (OPM) is forecasted to rise to 12-14%, up from 11-13% in the previous fiscal year.
India’s active pharmaceutical ingredients (API) industry is projected to grow 7-8% in FY25, expanding from an estimated $13-$14 billion in 2023, according to a report released by credit rating firm ICRA.
This growth is anticipated due to a steady increase in the pharmaceutical formulations sector, driven by factors such as a rising geriatric population, higher prevalence of chronic diseases, and increased demand for contract manufacturing. Global customers are diversifying their supply chains and focusing more on domestic sourcing, contributing to this growth.
Deepak Jotwani, Vice President and Sector Head- Corporate Ratings, ICRA noted that lower input costs and revenue growth are expected to sustain the earnings improvement seen in FY2024. The operating profit margin (OPM) is forecasted to rise to 12-14%, up from 11-13% in the previous fiscal year.
However, the report highlights potential challenges, including subdued demand from key export markets like Europe and supply chain disruptions due to tensions in the Red Sea, which could impact freight costs.
In FY2024, India imported APIs and bulk drugs worth Rs 377 billion, representing 35% of its total API needs. The government’s production-linked incentive (PLI) scheme for the bulk drugs sector has shown favourable traction, particularly for select molecules like Penicillin G and 7-ACA, which require significant investment and high energy consumption.
To date, 62% of the planned Rs 65 billion investment under the PLI scheme has been utilised in 32 out of 48 planned projects. A prominent Indian API manufacturer is expected to launch its Penicillin G production facility under this scheme in FY2025, potentially reducing dependence on Chinese suppliers.
Additionally, domestic manufacturing is expected to lower inventory carrying costs for formulation manufacturers through improved supply chain management. Capacity expansion is nearing completion, with capital expenditure (capex) projected to decrease to Rs 5.6 billion in FY2025 from Rs 7.6 billion in FY2024.
(IANS)
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pharmaceuticals
API manufacturer
API manufacturing
ICRA
API
drug manufacturing
Deepak Jotwani
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