In this first instalment of a five-part series on how some of the defining numbers in key sectors are springing back to the pre-pandemic level, Sohini Das looks at India’s pharmaceutical sector
India’s Rs 1.5-trillion domestic pharmaceuticals market is largely normalised and back on the growth path, though volume growth remains a cause for concern, say industry insiders.
In terms of absolute value, the domestic pharma market has crossed the pre-pandemic level of June 2019 by a strong margin. The size of the market grew from around Rs 1.3 trillion in June 2019 to Rs 1.4 trillion in June 2020, a month hit by the coronavirus pandemic and lockdown. By comparison, June 2021 saw the market growing by 11.7 per cent, led by a 5.3 per cent price increase and 4.1 per cent growth from new products. But annual volume growth during the month was only 2.3 per cent.
“The pharma market is better off compared to other economic sectors. However, growth in volume terms is only around 3 per cent. There is volatility and anxiety over a potential third wave of the pandemic. Patient consultation with doctors is at only 60-70 per cent. This has to go up, particularly in chronic disease management, as these have long-term implications,” said Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), the umbrella organisation of India’s big pharma players.
IPA members account for 60 per cent of the domestic market and about 80 per cent of India’s pharmaceutical exports.
There had been a steep decline in sales during the stringent nationwide lockdown in April-June 2020, as the sale of acute therapy drugs (like antibiotics) fell sharply. In March last year, consumers had stocked up on chronic medicines for diabetes, hypertension, etc, and the month had seen 9 per cent sales growth. But in April 2020, sales had declined once again — by 11.2 per cent on a year-on-year (YoY) basis. Despite a drop in overall sales, however, drugs for cardiac diseases and diabetes did well in April, registering 5.9 per cent and 6.4 per cent YoY growth, respectively.
In the March-May period, the Indian pharma market’s (IPM’s) growth was just 3.6 per cent. It broadly normalised in June 2021, after strong sales growth in April and May, amid a second wave of the pandemic and a lower base, said Surajit Pal, an analyst with Prabhudas Liladhar.
In a recent report, Pal attributed the normalised growth to a number of factors – a decline in the number of active Covid-19 cases after its peak in May, the fact that the IPM supply chain was largely streamlined in June 2020, and a high demand for anti-infective or acute therapy products because of a lower base.
Covid-related therapies and immunity-boosting medicines are also contributing to the IPM’s growth. This is evident in growth seen by pharma companies with a strong Covid-19 portfolio. For example, Glenmark Pharmaceuticals, which has seen a huge demand for its oral anti-viral drug, Favipiravir (used in the treatment of Covid-19), posted a strong YoY growth rate of 38.8 per cent for June 2021, and 105 per cent for the April-June period.
Cipla, Cadila Healthcare and Dr Reddy’s Laboratories, too, reported strong double-digit growth rates of 19.9 per cent, 12.5 per cent and 11.2 per cent, respectively, for June 2021.
Anti-infectives, a major therapy area for the domestic pharma market, which had seen a fall last year, also seemed to be getting back on its feet. It contributed 14 per cent to the IPM value in June.
According to Sheetal Sapale, president of market research firm AIOCD AWACS, the consumption of drugs in acute therapy depends on seasonal disease patterns. This was disturbed during the lockdown, and that led to de-growth. “The staggered lifting of lockdowns, coupled with the vaccination drive, has increased people’s confidence. They have started picking up on their normal routines to some extent. So, the seasonal disease patterns are coming back, and hence the normalisation of sales trends in these therapies,” Sapale said.
Data sourced from AIOCD AWACS show that the growth rate for anti-infective therapies, after slipping to 4.8 per cent in June 2020, zoomed to 17.9 per cent in June 2021.
Similarly, the gynaecological segment, which had clocked a meagre 0.2 per cent growth in June last year, has posted 9 per cent growth in June 2021 – that is slightly higher than the 8.8 per cent growth rate in June 2019. Dermatology clocked 9.7 per cent growth last month, compared with 2.5 per cent in June 2020, and 10.4 per cent in June 2019.Read our full coverage on Pharma industry