Edelweiss Securities said that the optimism is on the favourable regulatory environment.
The US Food and Drug Administration (USFDA) approval rate rebounded to 198 nods after a temporary hiatus in the March quarter, with 109 approvals due to extra documentation requirements for elemental impurities, the report revealed.
Following the recent USFDA clearance of Sun Pharma’s Halol plant, the report said piled-up filings are expected to keep the approval rate buoyant for domestic pharma companies.
“On the regulatory front, favourable inspections at Cadila’s topicals plant, Dr Reddy’s Medak, Srikakulam SEZ, UK, and Sun Pharma’s Halol plant demonstrate that the worst in terms of regulatory issues is over,” it said.
Edelweiss Securities, however, said that the pricing challenges in the US is still cause of concern.
“Though the Q1FY19 results will be seemingly better, we believe underlying growth will remain muted. However, initial signs of rebound in domestic markets is key positive,” it said.
The domestic pharmaceutical sector accounts for 3.1-3.6 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms.
It is expected to grow to $100 billion by 2025, according to the report.