The Indian Pharmaceutical industry is witnessing growth majorly backed by the rising exports of generic medicines to the developing and developed nations. Other factors contributing to the growth are greater penetration in rural markets, heightened health awareness, increasing affluence, changing lifestyles resulting in higher incidence of lifestyle-related diseases and increasing government expenditure on healthcare, according to Credit Analysis & Research (CARE).

''The size of the industry is expected to increase from USD 24.87 billion in 2013 to USD 47.88 billion by 2018 at a CAGR of 14%. Domestic consumption accounted for about 47% and export market about 53% of the total production in India in FY13.''

According to the commerce ministry data, the country's pharmaceutical exports aggregated USD 10.1 billion during FY13 out of which exports to US accounted for approximately 31%. US is the largest pharmaceutical market of the world and India is the largest supplier of drugs to US in terms of volume which majorly comprise of generic drugs. Demand of generic drugs in US is expected to rise in future on account of patent cliff i.e a large number of patented drugs are approaching their patent expiration date.

''Indian companies have an opportunity to capitalize on patent cliff and gain a greater share of the growing generics market. During 2014-2016; about USD 92 billion worth patented drugs are expected to go off patent in the US. The factors conductive to take on the opportunity are large number of ANDA approvals secured by Indian companies, introduction of the patient protection and affordable care act (PPACA) in US, low cost manufacturing base of India, rising M&A activities in India which will help to boost research and development (R&D) expenditure, help achieve economies of scale and strengthen the marketing network in the industry,'' CARE added.

''However, USFDA scrutiny on Indian pharmaceutical companies may hamper the growth story if the companies will not raise the quality of production and make sure the quality standards are adequately met. Increasing exports in the overall pharmaceutical industry augurs well for the participants as the same is likely to drive sales and improvement in the operating profitability resulting into better cash flow generation. Subsequently, there is a high possibility of improvement in the credit profiles of the pharmaceutical players,'' it said.