Three consecutive months of growth boosts confidence of pharma manufacturers

New Delhi The third consecutive month of healthy growth recorded by the Indian pharma market is set to turn positive for the Indian drug makers. Weak growth during the previous months, based on the previous year̵

7;s high, impacted the financial performance of the drugmakers during the June quarter. Thus, now rebounding growth could be a positive for drugmakers.

The All India Organization of Chemists and Druggists showed that the Indian pharma market grew at 12.1 per cent during August. Average pharma market growth during the last three months was a strong growth of 14.1%, marking a strong recovery from the 7.1% fall in March-May 2022.

Analysts said the development is broad and based on all treatments, which is an encouraging sign. Barring anti-infection, which still grew at a slower rate of 2%, and even as the impact of the Covid-led higher base continues over the past, most other segments have seen decent growth. Respiratory, gynecological, central nervous system and cardiology pharmaceutical segment registered a year-on-year growth of 14.7-18.7% in August.

Analysts at Motilal Oswal Financial Services Ltd said prices and volumes rose 6.3% each year on account of a marginal increase in new products.

The growth of the pharma market bodes well for companies that are facing adverse conditions in international markets such as the US. Higher competition in export markets is causing increasing pricing pressure, while high input and freight costs are also posing challenges.

HSBC Securities and Capital Markets (India) Pvt. Ltd. The Indian Frama market data for August 2022 provides comfort on the outlook for India’s formulations business, which accounts for 20-65% of its revenues.

“We are seeing most companies trying to market in India (eg expanding sales teams, looking for M&A),” analysts said.

Analysts at Kotak Institutional Equities expect the Indian pharma market to register a year-on-year growth of 11-12% in FY2023 on the back of further improvement in pricing and non-COVID volumes.

Meanwhile, drugs being included in the National List of Essential Medicines would mean that the pricing rules for these drugs would be applicable.

Some of the products in the revised list are amikacin, cefuroxime, insulin glargine, itraconazole, mupirocin and teneligliptin, with annual sales of over Rs 300 crore, according to analysts’ estimates.

According to ICICI Securities, multinationals like GlaxoSmithKline Pharmaceuticals (GSK) and Sanofi will be negatively impacted. GSK will have to reduce prices for Ceftum and TBact.

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