Domestic pharma industry to grow 3-5 pc this fiscal, little impact of lockdown: Ind-Ra

"Additionally, the seasonality in the Indian domestic business will support the recovery. Also, the continuous rise in the number of COVID-19 cases in the country will result in further volume growth in related therapies," Ind-Ra noted. Besides, pharma companies' large cash balances and sufficient headroom under debt covenants along with diversified funding sources will mitigate any impact of the ongoing lockdown, it added.

The COVID-19 impact on the pharmaceutical sector has been less pronounced than observed in other sectors, as it falls under the essential service category and is exempt from restrictions under the nationwide lockdown, the rating agency said. Manufacturing volumes after declining to 50-60 per cent in April, given the strict lockdown, has improved significantly to 60-80 per cent of the original capacities during the May-June period so far, Ind-Ra noted.

However, the companies have refrained from new launches during the lockdown due to lack of effective marketing campaigns, the rating agency said. Further, companies may take price hikes on non-DPCO (Drug Price Control Order) products up to 8 per cent unlike the earlier average price hike of 5 per cent (max limit 10 per cent) due to an increase in raw material cost and the additional cost incurred towards raw materials, logistics and manpower, it added.