Sector Watch: Pharma sales growth skid last quarter; peek at outliers of 2021

The Indian pharmaceutical market was impacted last year as Covid-19 disrupted the supply chain, but bounced back in mid-2021 as the severity of the pandemic led to a major jump in hospitalisation and mortality.

However, sales growth in the local market has slid thereafter to single digits for the last three months, shows data compiled by Fitch’s India Ratings (Ind-Ra) along with All Indian Origin Chemists & Distributors Ltd (AIOCD).

On the flip side, given the surge in sales in the first half of the current financial year, especially during the first quarter (April-June 2021), the industry seems poised to clock what could be the best performance in at least six years, the ratings firm said.

India Ratings said it expects the industry to grow 12% during the year ending March 2022, on a low base of just 2% rise in the previous year. This would be higher than the growth clocked during FY17, FY19 and FY20 when domestic sales grew 10%.

Last quarter’s sales growth of 6% was mostly due to a price rise as volume growth and new product launches were minimal.

Ind-Ra said the 5.3% year-on-year revenue growth in local market during December 2021 was led by some improvement in growth in chronic therapies namely cardiac and central nervous system (CNS), while anti-infectives witnessed a decline. Acute therapies namely gastro-intestinal, respiratory and pain/analgesics continued to witness strong growth, aided by the low base impact.

During December, volumes declined 1.5% year on year (November 2021 had sported flat growth year-on-year). Price growth was 5.4% year-on-year, the same as November. New product launches were up 1.4% year on year, driven by acute therapy products.

Ind-Ra expects demand for analgesics, multivitamins, and cough and cold segments to improve over the next three months, owing to seasonality and the third wave of Covid-19 infections.

What’s moving from the shelves, what’s not

If we look at the key product categories that drive domestic sales for the pharma industry, cardiac, anti-infective, gastro and anti-diabetic are the key therapies account for half of the total sales.

In the most recent month of December, none of these key categories managed to grow in double digits. Indeed, sales of anti-infectives actually declined year on year while that of anti-diabetic medicines barely grew.

Respiratory and analgesics were the only two therapies that grew over 10%.

Which companies are growing faster than the rest?

While the overall domestic sales growth for the industry was pegged at 14.9%, several companies outgrew their peers. Aristo, Macleods and Emcure led the growth charts with over 20% growth.

Mankind Pharma, Dr Reddy’s Labs, Intas Pharma, Torrent Pharma and Sun Pharma were the other key players growing faster than the industry average in the 2021 calendar year.