This will be driven by 9-11 per cent revenue growth from the US market, 7-9 per cent each from the European and domestic markets, and 11-13 per cent from the emerging markets, according to credit rating ICRA.

The revenue growth from the domestic market is likely to improve by 7-9 per cent in FY25 against 6.4 per cent in FY24.

ICRA has maintained its stable outlook for the Indian pharmaceutical industry, led by steady demand in the export and domestic markets and the comfortable credit profile of key industry participants.

Kinjal Shah, SVP and Co-Group Head–Corporate Ratings, ICRA, said they expect the operating margins of its sample set of companies to remain stable at 23-24 per cent in FY2025, “supported by an increase in revenues, higher contribution of complex generics, specialty molecules and soft prices of raw materials.”

In the US market, revenue growth is expected to moderate to 9-11 per cent in FY25 due to the high base of the previous fiscal. However, it will still remain much higher than the recent years.

Indian pharmaceutical companies also benefited from the easing of pricing pressure in the US in FY24 and FY25 (year to date) due to supply-side constraints in the market, providing volume growth and better pricing opportunities.

“However, the sustainability of the same remains to be seen in the current fiscal. Additionally, regulatory risks pertaining to this market remain a key monitorable, given the heightened scrutiny by the USFDA”, said Shah.

In the European market, the pharma companies are expected to witness revenue growth of 7-9 per cent in FY25, moderating from the previous year, due to the base effect.

The research and development expenses are estimated to remain at 6.5-7 per cent of their revenues as they optimise their spending, focusing more on complex molecules and specialty products, against generics, said the report.