It is expected that price hikes and new launches will push the growth of Indian pharma market in the coming months. While volume growth could remain weak in the near term, it is expected that the market will grow at a high single to low double-digit rate in the upcoming months, primarily driven by price hikes and new launches.
According to a recent report by Emkay Global Financial Services, the Indian pharma market growth had decelerated in February. It grew only 2.6 per cent versus 6.6 per cent in January 2020. On the MAT (Moving Annual Total) basis, the pharma market grew 3.4 per cent, primarily driven by new products growth of 3.4 per cent as pricing growth of 4.3 per cent was fully offset by a volume decline. The report was based on the total sales audit data from IMS.
It observed that sales of all major therapies, except respiratory, continued to grow, though at a slower pace. Within the chronic therapies, sales of cardiac therapy grew 9 per cent in February compared to 12.5 per cent in January. Similarly, sales of anti-diabetic therapy grew 7 per cent in February compared to 8.8 per cent the month before. At the same time, vitamins, mineral supplements also maintained double-digit growth in February (around 10 per cent), whereas respiratory and anti-infectives declined by 22 per cent and 15 per cent respectively.
The report points out that among the pharma majors in India, Sun Pharma grew at the fastest rate of 4 per cent in February, followed by Lupin and Dr Reddy's Laboratories at 2 per cent. On the other hand, Ipca Laboratories, Cadila and Cipla reported flat sales.
During the period, companies such as Torrent Pharma (grew at 8 per cent) and Ajanta Pharma (16 per cent) also performed well.
The Indian pharmaceutical sector is expected to grow to $100 billion, while the medical devices market is expected to grow to $25 billion by 2025. Pharmaceutical exports, including bulk drugs, intermediates, drug formulations, biologicals, Ayush and herbal products, and surgicals, from India stood at $16.3 billion in the financial year 2019-20.
A robust demand from most economies has boosted India’s exports in the first half of the current fiscal, a research report by CRISIL said. Regions such as the US and Europe contributed to growth in exports, thanks to increased demand for drugs, especially antivirals and antibiotics for treatment of Covid-19. In addition to this, global de-risking of the supply chain has boded well for the Indian bulk drug exports. However, the CRISIL report says the Indian domestic market fell by 2.5 per cent in the first half of the current year.
Given the lockdown in April and May, the domestic pharma market logged a 6 per cent decline in growth in the first quarter of this financial year. Closure of smaller clinics and hospital OPDs and postponement of surgeries resulted in slower sales of drugs in the domestic market, although some support was provided by an increase in sales of chronic therapies such as cardiac and anti-diabetes medicines. This continued for some more time as the growth in the domestic market remained muted in the second quarter as well, leading to an overall decline of 2.4 per cent in the first half.
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It is expected that the domestic market will bounce back in the later half of the current fiscal as demand disruptions ease. Revenues of pharma companies will show an uptrend this fiscal driven by the exports growth in both formulations and bulk drugs and the players are expected to have 7-8 per cent (in rupee terms) on-year growth this fiscal. The CRISIL report further observes that the gradual easing of lockdown restrictions, coupled with demand for pharma products and bulk drugs in both exports and domestic markets, will aid this revenue growth.
The report pointed out that a ramp up in specialty drugs and biosimilar exports, along with strong domestic sales, will aid revenue growth for pharma companies in the next fiscal, too. Lower travel and marketing costs on account of the lockdown, along with a favourable business mix had led to an improvement in margins for formulation and bulk drug players in the first half of this fiscal.
