Slow growth of Unichem portfolio a concern for Torrent Pharma

India revenue of the pharmaceutical firm has remained flat over the past three quarters

After four quarters of consolidation, Unichem’s business (which Torrent Pharma acquired in FY18) has not gained traction. The domestic focussed pharma major, however, hopes the portfolio should grow slightly better than the market from here on.

Analysts feel that most of the growth levers from Unichem acquisition have been already captured — be it in terms of cost synergies or per capita per month (sales) improvement by rationalisation of field force.

The India revenue of Torrent Pharma has remained flat over the past three quarters — ~830 crore in Q1FY19, ~816 crore in Q2 and ~835 crore in Q3. This assumes significance as the Ahmedabad-based pharma major draws over 40 per cent of its consolidated revenues from the domestic market.

A Torrent Pharma spokesperson admitted, “The growth in acquired portfolio is lower due to various corrective actions taken in order to align the acquired business practices with Torrent practices. Various actions have been executed in the acquired portfolio to augment demand generation and drive growth through specialty focus. We believe the short term pains will provide a platform for looking at a healthy growth in coming years.” He, however, pointed out at the same time that according to AIOCD AWACS (the market research firm) Torrent portfolio has grown at 15 per cent on December moving annual turnover (MAT) basis versus the domestic pharma market growth of 9 per cent.

Deepak Malik of Edelweiss said that Unichem’s domestic portfolio growth is slow. The fact that Torrent has rationalised the portfolio, workforce and generated synergies is evident from improvement of Unichem's margin to 30 per cent from sub 20 per cent, he explained.

Q3 numbers, however, indicate that growth in the acquired portfolio will remain a challenge. The acquisition comes with significant overlap and 20 per cent of the portfolio includes Losartan, an anti-hypertension molecule that is not growing rapidly as the market has shifted to another molecule Telmisartan.

Losartan, an anti-hypertension drug, in which Unichem enjoyed 37-38 per cent market share, has hardly seen any growth in the past five years.

The company spokesperson, however, highlighted that Losar (a flagship brand for Losartan) grew 13 per cent in Q3. Over the past one year (as on December MAT over previous year), Losar brand has grown only 4.5 per cent. Torrent thinks that Losartan is a good fit as it plugs a gap in its antihypertensive portfolio, as it is the preferred drug in the diuretic hypertensive market, which is 25 per cent of the overall hypertension market.

The company said that the top five brands (which contribute around 50 per cent of the total acquired portfolio) have grown by 21 per cent in Q3 compared to 14 per cent growth in the cardiovascular market. Torrent thus expects the growth in the acquired portfolio to be better than market from here on. “Trend is quite encouraging for other key brands like Ampoxin, Telsar, Vizylac & Unienzyme,” the spokesperson added.