Pharma retail market shrinks 12% in April, worst in 3 yrs

The national lockdown due to the Covid-19 pandemic has led to one of the sharpest falls in three years in the domestic pharma retail market, with growth declining by 12% in April. This is the first year-on-year (YoY) decline since GST’s implementation in July 2017.

The national lockdown due to the Covid-19 pandemic has led to one of the sharpest falls in three years in the domestic pharma retail market, with growth declining by 12% in April. This is the first year-on-year (YoY) decline since GST’s implementation in July 2017. Production at pharmaceutical units continues to be impacted due to the lockdown-driven disruption, with companies facing challenges in distribution, manufacturing and logistics.

The market was pulled down by acute therapies, with demand for these medicines collapsing by nearly 21% in April YoY. With prescriptions for anti-infectives down, sales of pain, gastro and vitamins — usually prescribed together — were also impacted, an industry expert said, adding that these four together comprise around 40% of the overall market (see graphic). Acute therapies were worst hit in April with anti-infectives (-31% YoY), pain (-22% YoY) and gastro (-16% YoY) seeing big declines.

Among the therapies, chronic saw low single-digit growth of around 5%, helped by pre-buying from patients in cardiac and diabetes categories, according to data from market research firm IQVIA. In this chronic therapy category, cardiac (13% YoY) and diabetes (10% YoY) segments managed growth. On a trailing 12-month basis, seasonal segments such as respiratory (13.5% YoY) and anti-infectives (9.8% YoY) were main drivers of the 10.6% YoY growth in the acute segment.

In FY21, IQVIA expects the domestic market to grow at 1-5%, one of the lowest rates in recent years, with a muted 4-8% YoY growth for major companies. Earlier, the pharma market — valued at around Rs 1.49 lakh crore ($20 billion) — typically recorded strong YoY growth of 10-12%.

The decline in pharma growth over March, when the lockdown had just started, stood at 7%, while trailing 12-month growth stood at 8.6% YoY. Pricing has driven nearly 60% of growth for the industry on the trailing 12-month basis, with volume growth attributing an insignificant 0.7 percentage point and contribution from new launches at 2.8 percentage points.

Cadila Health, Cipla and Dr Reddy’s — those with a substantial exposure to the acute therapy — underperformed the market during the month. Ipca and Torrent Pharma were the only companies with positive growth in April, according to a note by brokerage firm CLSA. Interestingly, Ipca saw yet another strong month with nine of its top 10 therapies growing in double digits. Its anti-malarial drug hydroxychloroquine, considered a potential treatment for Covid-19 in certain countries, registered 19% YoY growth.

Overall, other than the two chronic therapies of cardiac and anti-diabetic, all the top 10 therapies, especially acute, saw big declines on a YoY basis. Chronic therapy brands had strong sales growth — Mixtard (under diabetes, 19%), Lantus (diabetes, 30%), Levipil (CNS, 24%), Thyronorm (thyroid, 10%), and Telma (cardiac, 23%).