The Indian pharma market reported 11.9% yearly growth in Q4 FY2023.
The sector witnessed significant
growth across the Therapy spectrum during the quarter. The main drivers behind the growth of the
sector were a double-digit growth in anti-infectives(24.7%), respiratory(33%), pain management(12.3%),
and dermatology(10.3%) segments mainly due to the influx of flu season during the quarter.
The Indian pharma market is expected to grow at a mid-to-high single-digit growth in FY24 driven by
price hikes by companies, recovery in volume from the US and Europe markets, growth in domestic
formulation, and a healthy product pipeline. Emerging opportunities in CDMO and API synthesizing and
biosimilar products will be the key growth drivers for the industry.
The US portfolio is also expected to deliver decent growth amid a favorable currency movement during
the next quarter as the rupee depreciates further vis-à-vis the US dollar.
Overall, It can be assumed that the overall long-term market outlook is still intact and expected to
deliver healthy performance in the upcoming quarters.
Huge Consistent Impairment of Intangibles
Dr. Reddy’s Lab has faced huge impairment losses in its intangible product portfolio consistently over the
last 5 years. This impairment is evenly spread across its product intangibles, intangibles under
development, and Goodwill. Since a Pharma company’s core business and revenue stream is directed by
the quality of licenses, rights, and acquisitions it has, it is a big risky area of the Company.
Contingency risks of Litigation & Taxes.
The Company is involved in disputes, lawsuits, claims, governmental and/or regulatory inspections,
inquiries, investigations, and proceedings, including patent and commercial matters that arise from time
to time in the ordinary course of business. However, due to the complex nature of these cases, it is not
possible to make a reasonable estimate of their financial impact. These contingencies can have a huge
impact on the future profits.
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