Three straight months of growth boosts pharma makers’ confidence

Market


NEW DELHI : The third consecutive month of healthy growth registered by the Indian pharma market is set to accrue positives for Indian pharmaceutical manufacturers. The subdued growth during the earlier months on a high base of the previous year had a bearing on the financial performance of pharmaceutical manufacturers during the June quarter. Thus, rebounding growth now may accrue positives for drug makers.

The Indian pharma market grew at 12.1% during August, All India Organization of Chemists and Druggists showed. The average pharma market growth during the past three months thus was a robust 14.1%, marking a strong recovery from the 7.1% degrowth in March-May 2022.

The growth remains broad-based and across therapies, an encouraging sign, said analysts. Barring anti-infectives, which still grew at a subdued rate of 2%, and even as the impact of covid led high base during the past continues, most other segments grew well. Respiratory, gynaecology, central nervous system, and cardiology drug segments exhibiting a 14.7-18.7 % y-o-y growth in August.

Prices and volumes grew 6.3% y-o-y each, aided by a slight growth in new products, said analysts at Motilal Oswal Financial Services Ltd.

The pharma market growth bodes well for the companies that are seeing headwinds in the international markets as the US. Greater competition in the export markets is leading to pricing pressure, while higher input and freight costs also pose challenges.

The trends in the local market are crucial to support the overall earnings trajectory of Indian companies, said analysts at HSBC Securities and Capital Markets (India) Pvt. Ltd. Indian phrama market data for August 2022 provides comfort on the outlook for India formulations business which accounts for 20-65% of revenue.

“We continue to see most companies stepping up efforts in the India market (such as expansion of sales teams, looking for M&A),” said the analysts.

Analysts at Kotak Institutional Equities expect the Indian pharma market to report 11- 12% y-o-y growth in FY2023 aided by pricing and further recovery in non-covid volumes.

Meanwhile, drugs being included in the National List of Essential Medicines, will mean pricing regulations coming into play for these drugs.

Some of the products that have been included in the revised list are Amikacin, Cefuroxime, Insulin Glargine, Itraconazole, Mupirocin and Teneligliptin each with annual sales of more than Rs300 crore according to the estimates of analysts.

MNC’s such as GlaxoSmithKline Pharmaceuticals (GSK) and Sanofi would be negatively impacted, according to ICICI Securities. GSK would have to reduce prices for Ceftum and TBact.

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