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Indian pharma market to grow at 15.3 pc CAGR by FY14

Source : PTI
Last Updated: Sun, Jun 03, 2012 10:53 hrs
Mid-sized pharma margins to crimp despite sales

The growth rate for the domestic Indian pharmaceutical market is set to rise over medium-term, according to a research report.

The revenue CAGR (compund annual growth rate) over the past three years had been 12.4 percent, but it is expected to be up at 15.3 percent from FY12 to FY14, Barclays Capital Equity Research said here in its report - India Healthcare & Pharmaceuticals.

The growth is expected due to factors like new product launches, focus on improving effectiveness of field force additions and favourable pricing environment, it said.

Most of the pharma companies are expecting to continue with product launches in India over the next 2-3 years.

The pricing environment in the Indian market has been a favourable one, and past growth has in part been driven by price increases of 2-4 percent annually.

The National Pharmaceutical Pricing Authority (NPPA), which monitors and controls pricing in the Indian market for essential medicines, through the Drug Price Control Order (DPCO), could pose a potential headwind to industry growth, Barclay's Balaji Prasad said.

The DPCO currently controls pricing for around 25-30 percent of the pharma market.

The current revised proposal, called the Draft National Pharmaceutical Pricing Policy (NPPP) 2011, seeks to use the average price of the top three brands as a ceiling price, and this is bringing significant uncertainty to the pricing environment. The current pricing mechanism is cost-based.

However, uncertainty prevails about the final form of the policy, the extent of the medicines being price-controlled and the potential impact it could have on revenues, it said.



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