IndiGlobal Media Bureau
The pharma industry in India has seen rapid growth in the past few years with rapid digitization. The pharmaceutical industry is expected to grow to $ 1.5 trillion by 2023. The upcoming pharmaceutical trends will add an ever-evolving space for transformation in the pharmaceutical industry. Let us take you to a walkthrough of the technology trends in pharmaceuticals.
1. E-Pharmacy – An E-pharmacy is a boon as it is efficient and responsible in remote areas. It provides easy and affordable medicines to the people at their doorstep in just one click and additionally, gives information about the medicinal remedies’ awareness to the purchaser.
2.Digitization with Artificial Intelligence and Machine Learning: The use of Artificial Intelligence and Machine Learning has changed the entire consumer behavior and now the customers can experience real-life shopping experiences/medical consultations sitting back at home,
3.Digital Records: The use of digital processes has been around for some time and will continue in 2022. Digital processes are especially helpful in promoting regulatory compliance because they allow pharmaceutical companies to closely track data
4.Cloud Computing: Pharmaceutical companies rely specifically on cloud security and central access to analyze complex data in clinical research. Cloud scalability keeps records of thousands of remotely monitored patients
5.Digital Trainings: Online training courses can be offered anytime, anywhere and can be personalized for each user, making them extremely cost-effective. Online training courses for new technologies in the pharmaceutical sector will be further expanded in 2022 to improve operations and compliance
6. Blockchain Technology and Big Data: Blockchain technology will further revolutionize the pharmaceutical industry in 2022, by helping them secure data and increase visibility, compliance, improved traceability of drugs, and simplified transactions.
What Market speaks:
The revenue growth for ICRA’s sample of 21 Indian pharmaceutical companies was moderate at 6.4% in Q2 FY2022, down from 16% in Q1 FY2022. Normalization of the base and pricing pressures in the US market were the major reasons for slowing growth momentum in Q2 FY2022, even as growth under domestic and emerging markets remained healthy.
However, The sample set reported a 15.3% Y-o-Y growth in domestic revenues, against a ~14.6% Y-o-Y growth for the IPM. A combination of steady normalization in hospital footfalls and field force operations (given the relatively lower restrictions on account of Covid-19), continued traction in acute therapies and better pricing supported healthy revenue growth across companies. Going forward, sustenance of trend in doctor visits and elective surgeries gave the news around the Omicron variant, and performance of new launches in addition to revenue growth momentum in the acute segment will remain key monitorable.
Therefore, Companies are focusing on specialty products, injectables, complex generics including first-to-file opportunities to improve margins for the US business, which has been impacted by the pricing pressure. Going forward, an improved product mix is expected to contribute to price stabilization. Overall, ICRA expects mid to high single-digit price erosion in FY2022.
The emerging markets were the star performers clocking a robust 30.6% Y-o-Y growth in Q2 FY2022. Growth for the sample set was primarily led by new launches, low base, strong demand, and INR depreciation. The companies in the sample set witnessed healthy Y-o-Y revenue growth of 12.3% from the European business. This was mainly driven by improving demand for non-Covid products in addition to new product introductions, INR depreciation, and expanding market coverage. This was despite heightened competitive intensity in some geographies.
The operating profit margins (OPM) for the sample set stood at 23.7% in Q2 FY2022 and 24.0% in H1 FY2022. Margins for the sample set showed marginal improvement in H1 FY2022 vis a vis H1 FY2021 due to turnaround of operations of one player. Excluding the same, the margins remained flat on a Y-o-Y basis. With rising raw material prices and logistic costs, margins contracted by 50 bps to 23.7% in Q2 FY2022. Full impact of input price hikes are expected to be seen in H2 FY2022 due to the lag effect.
Experts Views
Based on the trends, Ms. Mythri Macherla, Assistant Vice President & Sector Head, ICRA, said: “Revenue growth for ICRA sample set is estimated at 9-11% in FY2022 and in FY2023, supported by gradual recovery post the impact of Covid-19. In FY2022, the sample set is estimated to have witnessed growth of 13-15% in the domestic market, 14-16% in the emerging markets and 9-11% in the European business even as growth under the US business is expected to remain muted given the pricing pressure. The growth for the US and European markets also remains sensitive to depreciation of the INR against the USD/GBP/EUR.”
ICRA expects the R&D expenses to stabilize at current levels and remain in the range of 6.5%-7.5% for its sample set as companies continue to focus on complex generics, first to file opportunities, specialty products which entails higher R&D expenses. Stable investments in R&D to develop such products will support growth and margin improvement over the medium term.
“Going forward, ICRA expects the Covid-19 related improvement in margins to taper down. This combined with headwinds such as pricing pressures and rising raw material costs are expected to result in margins of the sample set contracting to 22.5% in FY2022 and further to pre-Covid levels of 21-22% in FY2023, though the same will continue to remain healthy,” adds
Mr. Deepak Jotwani, Assistant Vice President & Sector Head, ICRA.
“The outlook for the pharma sector remains Stable led by healthy revenue growth and margins. ICRA expects the sample set’s capital structure and coverage indicators to remain comfortable despite higher capex and R&D expenses given the robust cash levels.”
Dr Akula Sanjay Reddy, Member, Telangana State Pharmacy Council, Senior Pharmacologist “The pharma industry has been pivotal during the pandemic and this focus looks set to continue into 2022. The value of pharma innovation is undoubted, after COVID-19 vaccines were developed at record speed. Pharma manufacturing and supply chains have so far delivered 7.5bn vaccine doses, and also kept supplies of most other medicines on track. And despite outcry from emerging markets over the uneven distribution of vaccines, the patent system seems to have survived intact. The industry is entering 2022 in good shape. Even so, there will be challenges ahead.”
