In Second Half Of FY23, Indian Pharma Will Recover From Pricing Pressures

The Covid-19 pandemic has seen a decline in the demand for pharmaceutical products. This is causing the fortunes of many pharmaceutical companies to fall. Indian drug companies have suffered heavy losses due to high freight costs and price pressures in key US generics markets. Analysts are optimistic that the firms will regain some of their luster in the second half the current financial year.

The dynamics have changed after a long and successful Covid-19 period, which saw fortunes for pharmaceutical companies. The industry is experiencing a decline in demand for vaccines and medication.

The shares of most pharma companies have suffered a beating at the bourses. Many of them in double digits. The Nifty Pharma index fell 10.98% in the same time frame, while the broader Sensex remained stable.

Analysts believe that the decline in performance of pharma companies is due to the cost pressures, freight costs, and the pricing pressure in the US generics marketplace.

The US is the most lucrative market for pharmaceutical companies. The US is the most important export destination for the Indian industry. It accounted for almost 34% of total Indian exports in FY22. This reflected a growth rate of 2% dollars. According to CareEdge, an agency rating agencies, exports to the rest the world (ROW), saw a decrease of 7%.

The industry saw a decrease in profit margins due to normalisation of Covid-19-related medication expenses during FY22. This was compared to FY21.