Three Reasons Why Indian Pharma Market Sales Fell In March
India’s pharma revenues contracted for the second consecutive month in March, after recording growth for 17 months until January.
India’s pharmaceutical market sales contracted for the second straight month in March, after growing for 17 months until January.
The industry's revenue declined 2% over a year earlier in March, India Ratings & Research Pvt. said in a note, citing data released by All Indian Origin Chemists and Distributors. That compares with a 0.2% decline last month, and a 10.2% rise in March last year.
“The decline could be broadly attributed to three reasons—the high base impact, low Covid-19 (product) sales, and delay in inventory supply due to anticipated price hikes,” Krishnanath Munde, associate director at India Ratings, told BloombergQuint.
While March 2022 revenues fell, India Ratings expects sales of the Indian pharma market to have risen 15% year-on-year in FY22, aided by a low base of FY21. That compares with 8-10% growth over the past five years.
Volumes also declined 7.9% year-on-year in March, but were partially offset by 5.1% increase in price and 0.9% rise in new product launches, the ratings agency said.
In the quarter-ended March, volumes declined 3% year-on-year, while prices rose 5% and new product launches were up 2%.
Growth in acute as well as sub-chronic therapies slumped in March, India Ratings said, citing AIOCD data. And a fall in sales of anti-infectives weighed on the acute segment.
Chronic therapies for long-term ailments such as cardiac and diabetes, which have a 35% share in the Indian pharma market, grew 1.5% year-on-year.
The sub-chronic segment, having a market share of 21%, declined 0.3% over March last year.
The acute segment, including gastro and anti-infectives and having a share of 44%, fell 5.4% year-on-year.
Why The Decline
Pharmaceutical market revenue was impacted by a lower contribution from Covid-19 related drugs, Munde said. “Sales of Covid-19 related drugs declined 7% year-on-year.”
Volumes fell in key therapies such as anti-infectives (15% YoY) and vitamins (11% YoY). That's also because of a high base as in March 2021, the second wave had driven volumes higher.
India Ratings’ channel checks suggested inventory calibration in anticipation of a potential price hike April, Munde said.
The Indian government has approved a 10.8% increase in the prices of essential drugs regulated, which contribute around 17% of the Indian pharma market share, under the Drug Price Control Order.
“While India Ratings expects the magnitude of price hike to be higher in chronic therapies, such as cardiac and anti-diabetic, higher raw material costs and competitive intensity will also determine overall price hikes to be taken by companies,” said Munde.
Near-Term Outlook
"We expect the next two months to be tough for the Indian pharma market due to the high base of last year," Jefferies said in its industry report.
Motilal Oswal, in its report, expects the intensity of decline to increase as the Covid-driven high base of the past year (51.5% YoY growth in April 2021, and 47.8% YoY growth in May 2021) kicks in over the coming months.
Key Highlights By Therapy
Sales of anti-infectives slumped 18.5% over a year earlier, according to AIOCD data cited by India Ratings.
Vitamins, dermatological and gastrointestinal products also registered a year-on-year decline of 3.8%, 2.9% and 0.9%, respectively.
During the month, respiratory and neuro were top therapies, said Jefferies.
Respiratory registered the highest growth in the month—4% year-on-year—followed by neurological and gynaecological therapy areas.
MAT Performance
The moving annual total, or 12-month rolling sales, of overall pharmaceutical products rose 14.5% in March, said India Ratings.
Vaccine sales declined by 18.4% year-on-year, impacting overall growth, Motilal Oswal said in its report.
Company Performance
According to India Ratings:
AstraZeneca Pharma India Ltd. continued to register the highest year-on-year growth of around 13.8%, followed by Torrent Pharmaceuticals Ltd. and Ipca Laboratories Ltd.
Ajanta Pharma Ltd., Sun Pharmaceutical Industries Ltd., Eris Lifesciences Ltd. and Natco Pharma Ltd. also grew during in March.
Sales of Glenmark Pharmaceuticals Ltd. fell 21.9%, the most among peers, followed by FDC Ltd., Novartis India Ltd., Cipla Ltd. and Pfizer Ltd.
All other listed drugmakers registered a single-digit decline in sales.