Cost pressure likely to weigh on pharma companies' margins in Q4

Among Indian firms, Edelweiss feels that Cipla (respiratory) and Sun Pharma (specialty) are better placed to tide the price erosion

Indian drug firms are likely to post moderate growth during the fourth quarter of financial year 2021-22 (Q4FY22) supported by the domestic market. However, higher raw material and freight costs, as well as pricing pressure in the US (amid inventory destocking) could weigh on overall performance.

Edelweiss analysts estimate that pharma firms could report around 9 per cent revenue growth while the profit after tax (PAT) could dip by 2 per cent. ICICI Securities analysts feel Ebitda (earnings before interest, taxes, depreciation, and amortisation) would dip 200 basis points (bps) in Q4.

Owing to elevated prices of organic chemicals and solvents caused