Domestic pharma mkt grows 11.5% in Jul-Sept
Higher Volumes, Price Help Biz Expansion
Mumbai: The organised domestic pharma market grew in double digits last month, resulting in one of the best quarters in over a year, with 11.5% growth across July-September, buoyed by higher volumes (3.2%) and price growth (5.5%). The robust monsoon seems to have helped in reviving growth during the quarter ended September, with all key therapies exhibiting double-digit expansion, data from pharma research firm AIOCD Awacs showed. Earlier this year, the market seemed to be slowing down with the previous six quarters registering muted single-digit growth, pulled down by multiple factors including increase in use of low-cost generics, and lower sales in acute segment.
Significantly, regulatory hurdles impacted the sector as major companies received warning letters, flagging manufacturing concerns. The US Food and Drug Administration (USFDA) issued observations to companies like Cipla (for Goa, Bengaluru API), Lupin (Tarapur, Mandideep), Biocon (Bengaluru, Malaysia), Torrent Pharma (Dahej) and Dr Reddy’s (Bollaram API, Duvvada).
“These actions continued to erode pharma valuations: Lupin corrected about 20% year-to-date (YTD), following an official action initiated at Somerset, and a warning letter at Mandideep; Cipla slid 30% YTD, following observations at Bengaluru API and Goa; and Biocon is down 35% YTD, following observations at Bengaluru and Malaysia,” a note from Edelweiss Research dated October 7 said.
Further, the USFDA issued a warning letter to Glenmark Pharma for its manufacturing plant in Baddi (Himachal Pradesh), and flagged concerns at Aurobindo’s facility in Telangana recently. Analysts say, going forward, there could be an impact on valuations of certain companies due to rising regulatory risk.
Domestic sales are likely to grow about 8% year-on-year (YoY) driven by acute therapies as a heavy rainy season led to a surge in vector-borne diseases. The market registered a robust double-digit growth of 11.9% for September 2019, while for the corresponding month in the previous year it was 7.5%, and in August 2019 the market grew 9.4%. Acute therapy, which accounts for nearly half of the market, registered 11.7% growth, while chronic (31% of the market) grew by 13%, and sub-chronic by 10.7%. Sales of anti-infectives grew 10.9%, gastro Intestinal 12.1%, vitamins & minerals 11.4%, and pain/analgesics at 12.6%.