Pharma companies likely to attain normalcy this quarter; October sees bumper rise in sales

Pharmaceutical companies are expected to achieve normalcy in the ongoing quarter October-December as the gradual unlocking has led the activity levels to pick up in hospitals and clinics. Indian pharmaceutical market grew 1 per cent on-year in Q2 FY21, against a fall of 5.9 per cent in the first quarter, said a report by India Ratings. Further, in the month of October 2020, it grew at a 7-month high pace of 9.6 per cent on-year. This growth was led by volume growth of 0.9 per cent, price growth of 5 per cent, and a rise in product launches at 3.7 per cent on-year, the report added.

Pharma companies reported total sales of Rs 13,540 crore for October 2020. Nearly all the listed pharma companies are witnessing strong demand for Active Pharmaceutical Ingredient (API). Most companies remain optimistic about the medium-term outlook for their API segments, said a report by Macquarie Research. Overall API sales growth for listed companies stood at 19 per cent on-year in Q2 FY21, which was slightly lower than 31 per cent growth in the first quarter, but was still strong.

The lower sequential growth was on expected lines as Q1 performance was aided by the stocking up of APIs due to supply chain uncertainty with lockdowns, facility shutdowns leading to the sale of high-margin APIs, and sharper rupee depreciation, the Macquarie Research report added. It is further believed that the need for formulation companies to diversify supply chains, increasing regulatory oversight on API facilities, IP conflicts and competing interests, along with the geo-political tensions driving import substitution, may benefit Indian companies.

Meanwhile, the coronavirus-led lockdown had deferred the elective surgeries and had imposed restriction on medical representatives’ movement. While many hospitals shut their OPDs and doctors had stopped going to their clinics, the same hurt the generation of new prescriptions, which is an important growth driver for the pharma industry. However, when compared with other sectors, pharma was less impacted because of its essential service nature.