For Indian Drugmakers, This Is The Best Performing Business During Pandemic

While Indian pharmaceutical firms saw their business grow in the quarter ended June aided by increased demand amid the Covid-19 outbreak, the bulk drug segment was the outperformer.The active pharmaceutical ingredient business, or raw materials that go into making medicines, benefited from the curbs on imports from China after a border scuffle left around 20 Indian soldiers and an unknown number of Chinese military personnel dead in June.With China at present supplying more than two-thirds of the bulk drugs that Indian pharma firms use, the companies are now looking to make the most of the disruption in the global supply chain and the shift away from the world’s second-largest economy by ramping up domestic production.Cadila Healthcare Ltd.’s API business grew the most in the first quarter, followed by Dr. Reddy’s Laboratories Ltd. and IPCA Laboratories Ltd..Growth in gynaecology, pain and anti-diabetic therapies aided growth, Cadila Healthcare said.Alembic Pharmaceuticals Ltd. attributed its performance to opportunities following the supply-chain disruptions.Laurus Labs Ltd.—with profit surging more than 10 times in the first quarter—said in an exchange filing that traction in the API categories like anti-diabetic, central nervous system and proton pump inhibitors led to its improved financial performance..Even larger companies have seen their API business grow in the last two years and expect the trend to continue.Divis Laboratories Ltd., the second-largest API player, said in its earnings call the boost to its business was led by shortage in certain segments following the ban on Chinese imports and increased demand for certain therapeutics. Goldman Sachs said in its July report that the company’s growth was due to its top-selling APIs: naproxen sodium (a pain-relief drug), dextromethorpha hydrobromide (cough suppressant) and gabapentin (oral capsule used to treat partial seizures).Dr Reddy’s Labs said higher volumes of certain products, increased new product sales and favourable foreign exchange rates aided growth.New contracts and better realisations helped Sun Pharmaceutical Industries Ltd.’s API business, according to its annual report.Granules India Ltd. expanded capacity at one of its key units Bonthapally in Telangana to make paracetamol APIs. It also launched new molecules, including methergine (used to control postpartum haemorrhage), methocarbamol (muscle relaxant) and metformin (used to treat type 2 diabetes) contributed to its growth, it said in its annual report for 2019. The company said in its annual report for 2020 that its API unit-4 in Visakhapatnam has started contributing to Ebitda growth with higher margin products.Aarti Drugs Ltd. said at an earnings call that traction in its antibiotic therapeutics—or drugs used to treat bacterial infection like ciprofloxacin, ofloxacin and norfloxacin—aided growth in the year ended March.And companies expect the momentum to sustain.The active pharmaceutical ingredients market size is slated to grow by $60.56 billion through 2024, Laurus Labs said in its annual report.Asia was the largest market for APIs in 2019, and the region will continue to offer maximum growth opportunities to market vendors through 2024, the report said. Growing partnerships between Asian API manufacturers and global vendors, along with policy revamp in the region, preferring intellectual properties, will significantly encourage the API market growth in Asia, it said.India’s API industry is the third-largest globally, and contributes approximately 57% of APIs to the prequalified list of the World Health Organisation, KPMG said in a report in April.Support From GovernmentThe Indian government’s plan to localise manufacturing of 53 critical APIs and intermediates is expected to provide an impetus to drugmakers as heavy dependence on imports from China was a concern. That stood at 68%, according to KPMG.According to Goldman Sachs, the market model—which assumes gradual erosion in Chinese imports over the medium term—suggests that the annualised revenue growth rate of domestic API manufacturers would improve by 400 basis points to 14% by 2026.KPMG also expects the API Industry to grow at an annualised rate of around 8.6% over 2024, signifying its future potential and evolving global importance. The growth will be aided by increased focus on newer geographies, transition to speciality segment and strong domestic demand, it said..The World’s Best Hope For Enough Covid-19 Vaccine Comes From India

For Indian Drugmakers, This Is The Best Performing Business During Pandemic

The pharma firms’ segments that make raw materials for drugs led their outperformance in Q1.

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