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Pharma exports see double digit growth after a gap of three years

In April, pharma exports to the US has grown by 17.47 per cent as compared to a 10 per cent decline in the same month last year

B Dasarath Reddy  |  Hyderabad 

pharma

After a gap of three years Indian pharmaceutical exports are seeing a double digit growth in value terms starting this financial year, driven by a surge in exports across all the major destinations in the world, according to Pharmaceutical Export Promotion Council (Pharmexcil).

In contrast to a negative or a marginal growth witnessed over the past couple of years, the registered a 13.29 percent growth in the month of April while the same was as high as 25 per cent in May on a year-on-year basis, it said.

"Indian pharmaceutical exports have risen substantially in the months April and May, 2018 across all major markets including the US, South Africa and the CIS countries. that were facing regulatory issues in certain markets were able to resolve those problems and this could be one of the reasons for the rise in exports," director general told Business Standard.

tracks the export of pharmaceutical products, which include herbal, formulations, bulk drugs, vaccines and surgicals, to the top 25 destinations in the world. Formulations and bulk drugs alone accounted for almost 92 per cent of exports for the month of April reflecting the overall export pattern. Exports to 20 of these 25 destinations have been growing while to the remaining five destinations registering a negative growth, according to its data for the month of April.

Indications of a revival in export growth were visible during the previous year when the exports grew 2.91 per cent to $ 17.27 billion despite an 8 per cent decline in exports (in value terms) to the US market, which accounts for around 30 per cent of total from India. The year before, i.e, in 2016-17 registered a negative growth of 0.47 per cent representing a steep fall in exports during the year as compared to a 9.7 per cent growth in pharma exports during 2015-16.

In April pharma exports to the US has grown by 17.47 per cent as compared to a 10 per cent decline in the same month last year. According to Udaya Bhaskar, this is also a clear sign of revival in pricing margins as the export volumes to the US remained more or less the same in the previous two years.

analyst Amey Chalke considers these initial export numbers as part of a normalising phase of growth on a relatively lower base. "There has been a lower or a negative growth in exports for the last two years and this 13-14 percent rise in April exports is reflective of a normalising growth. As far as the 25 per cent year-on-year rise in May exports is concerned, all the large pharma had reported their worst export performance in the month of May, 2017, therefore provided a lower base for the present calculation. Going forward the average growth would be in the range of 13-14 percent," Chalke told Business Standard when asked for his observations on these initial export numbers.

Though agrees with DG's view that big like Sun Pharma were able to resolve the regulatory issues to be able to step up the exports to the US, Chalke, however, says that it would take some more time before these companies start delivering more on the exports front. "It is true that Indian pharma exports should only be led by large companies such as Sun Pharma. While they have resolved the regulatory issues the new approvals and the rise in new launches would take time," he said.

In March, 2018 report on pharma sector performance during the year 2017-18, Equitymaster said the continued to face bigger challenges on the regulatory front. "...while the big firms like Sun Pharma and Dr Reddy's Laboratories struggled due to increases scrutiny by the US Food and Drug Administration(US FDA), many mid and small sized companies generated decent sales from the US market," the report stated.

First Published: Tue, July 03 2018. 13:26 IST
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