India sees lowest growth in drug sales in March quarter.

India’s Rs.73,000 crore drugs market grew at the slowest pace in three years in the last quarter of fiscal 2013 because of a seasonal impact and a slump in the economy, raising the prospect of poor company earnings for the three-month period, analysts said.

The drug market grew 8.3% in the January-March quarter compared with 14.8% growth in the year ago period and 12-16% year-on-year quarterly expansion in the last three years in India, according to sales data compiled by market researcher IMS Health Information and Consulting Services India Pvt. Ltd, the Indian arm of IMS Health Inc.

Of the three months in the last quarter, March growth at 5.6% over the last month to Rs.5,752 crore was the slowest, IMS said. February saw growth of 7.9%, it said.

In the year ended 31 March, the local pharma market grew 10.2% on average, with the first three quarters posting year-ago increases of 11.6% (April-June), 10.4% (July-September) and 10.4% (October-December).

Growth “in the pharmaceuticals market (has) been declining from the higher double digit to single digit over the past quarters, and March sales has shown a uniform slowdown across all four zones in India,” the market researcher said in a report on Saturday.

Besides the seasonal impact, attributed to an uneven monsoon in 2012, the main factor behind the sales slump was the economic slowdown, IMS said. “Past history indicates that there is a close linkage between pharma market and GDP (gross domestic product) growth trends.”

IMS Health audits prescription and trade data provided by a panel of about 4,500 doctors and 6,000 stockists. The market data doesn’t include purchases by government and other institutions directly from manufacturers, which account for about 15% of total market size.

The ranking of therapeutic segments remained almost the same during the year with anti-infectives being the largest contributor to pharma sales in terms of value, followed by cardiac and gastro-intestinal disorders in second and third positions, respectively.

Abbott India Ltd, Cipla Ltd, Sun Pharmaceuticals Industries Ltd and GlaxoSmithkline Pharmaceuticals Ltd were the top four drug makers in terms of market share. The fastest growing companies were Macleods Pharmaceuticals Ltd (21.7%), USV Ltd (19.9%), and Glenmark Pharmaceuticals Ltd (18.6%).

Stock analysts tracking drug firms in the country said the growth slump will have an impact on final-quarter earnings.
“Domestic market growth was again disappointing at 5.6% in the month of March making it the fifth straight month of single-digit growth,” said Hitesh Mahida, a research analyst with Fortune Equity Brokers (India) Ltd.

“In addition to slow down in overall growth, uncertainty among the retailers over the price reduction also a key reason for less stock intake by them. Though the top local companies, which earn more from the export market may not be affected due to this. But companies mainly focus on local market will see their earning affected this quarter,” said Ranjit Kapadia, senior vice-president (institutional research) at Centrum Broking Pvt. Ltd.

“The slowdown in the cardiac segment, which grew only 5.8% in March, and diabetes (7.3% growth in March) space is now a cause for concern. These segments had been consistently growing above 15% in the last three years,” he said in a report last week, adding that the anti-infectives segment also continues to struggle and posted only 2.1% growth in the month.

Given the link between the healthcare market and GDP growth, IMS Health said the drug market should revive in the following months.

With the overall growth this year pegged at around 6.2%, up from 5% in 2012, the pharmaceutical market will also show a gradual improvement in the coming quarters, said IMS Health India head Amit Backliwal.

The IMS Market Prognosis report estimates that the market will grow 11-13% in 2013-14.


Source : livemint.com