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Pharma Industry revenue growth is likely to grow by 8.5 per cent (YoY) and will be driven by domestic formulations and niche launches in the US market, according to a report by Axis Securities.
The report says companies within the coverage are anticipated to post a collective revenue growth of 8.5 per cent year-on-year (YoY) and 3.1 per cent quarter-on-quarter (QoQ) for the second quarter of FY25. Alongside this revenue growth, EBITDA is projected to rise by 10.5 per cent YoY and 3.8 per cent QoQ, with adjusted Profit After Tax (PAT) expected to grow by 14 per cent YoY and 1 per cent QoQ. The Indian market is poised for a comeback compared to the previous quarter, bolstered by strong performance in chronic therapies and a resurgence in acute therapies. Notably, Dr. Reddy's, Cipla, and Aurobindo are expected to report gRevlimid sales of USD 125 million, USD 30 million, and USD 30 million, respectively, for Q2 FY25. Furthermore, an improvement in margins of 40 basis points YoY is anticipated for most companies within the coverage. This margin enhancement is attributed to a favourable quarter for the domestic formulations business, stable freight costs, consistent Active Pharmaceutical Ingredient (API) prices, and a more advantageous product mix, particularly towards niche launches. The improvement in API prices is expected to be driven by volume growth and supply checks from China. Additionally, crude prices have decreased, and shipping rates have stabilized in Q2 FY25, which is likely to help maintain margins for pharmaceutical companies in the near future. In the healthcare sector, the report predicts a 9.4 per cent YoY and 4.5 per cent QoQ revenue growth, primarily fuelled by improved occupancy rates and an expected 5-6 per cent growth in Average Revenue Per Occupied Bed (ARPOB). Companies like KIMS and HCG are projected to achieve 12 per cent growth on a YoY basis. However, Medanta may face challenges, lagging behind its peers due to a slowdown in the Lucknow facility, which is expected to see a 10 per cent decline in occupancies as the unit grapples with a lack of seasonality and acute cases compared to the previous year. Overall, moderate revenue growth of 5 per cent YoY is anticipated, supported by the mature hospital in Gurgaon. In terms of profitability, a 10.8 per cent YoY and 7.4 per cent QoQ adjusted EBITDA growth is expected for the hospital coverage. (ANI)
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