New Delhi : The NSE Pharma index has rebounded nearly 9% from its lows in June. While some of the gains can be attributed to an improvement in sentiment in equities, the pharma market is also showing signs of a revival since June, albeit on a higher basis, after having been weak in April and May.
According to pharma market researcher All Indian Origin Chemists and Distributors Ltd, the Indian pharma market (IPM) grew 14.1% in July compared to a year ago after registering a strong 16.6 per cent growth in June. IPM fell by 3.3 per cent in May from a year ago. , after falling 4.8% in April. IPM’s overall growth for the quarter stood at just 2.1% year-on-year.
The impact was visible on the performance of most pharma companies during the first quarter. Cipla, Lupine, Zydus, Cadila, which draw substantial contributions from the Indian market, saw a decline of 8-17% in domestic formulation sales in the first quarter. Sun Pharma posted a growth of just 2%. The rebound in IPM growth could now boost domestic growth for these companies for the July-September quarter.
The market is a key growth driver, especially in the current scenario, where companies investing in US markets are facing pricing pressure due to high competition in the base business.
HSBC Securities and Capital Markets (India) Pvt. Analysts said IPM remains a focus segment for most Indian pharma names as it delivers consistent growth with a healthy margin.
“IPM continues to offer sustainable growth opportunities with attractive margins and returns with much less investment required than export markets,” he added. Not surprisingly, in recent years most of the companies are focusing on the Indian market.
For example, Dr Reddy’s Laboratories had a large presence in the US, but they also decided to focus on India. After selling loss-making proprietary products, it is now focusing on less-competitive molecules and products in the US. Others are also planning to increase sales and strengthen marketing teams in India.
Analysts at Motilal Oswal Financial Services said gynecology, respiratory, pain management and dermatology were the major growth drivers for IPM, registering growth of 24%, 22.3%, 16.9% and 16.7%, respectively. He said this indicates that both the chronic and acute segments are growing at an impressive rate.
Analysts say the top 30 companies were Merck India, Natco Pharma, AstraZeneca Pharma India, Intas Pharmaceuticals, JB Chemicals & Pharmaceuticals and Emcure Pharmaceuticals (20-55.6% y-o-y) which grew significantly higher than the IPM growth in July. Is.
Growth in July was driven by volumes (6.4% year-on-year), price increases (6.3%) and new products (1.5%). Inflation-linked price increases for products under the National List of Essential Medicines have also enabled the increase.
Going forward, there will be new launches from products that are out of patent. As anticipated, after the brand’s patent expired, IPM rolled out generics for MSD’s anti-diabetes drug Januvia (sitagliptin). Overall, analysts are bullish on IPM growth. Anand Rathi Research said, “We believe older companies will have better opportunities to grow as Covid is now over domestically.”
Analysts at HSBC said trends in India’s formulations market are critical for the earnings trajectory of Indian firms, in view of continued macro headwinds (higher input and freight costs) and challenges in export markets (US price erosion).
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