The Indian pharma market continued its strong performance owing to a jump in revenue from the domestic market and new product launches.
"The domestic market contribution increased from 30% to 32% of revenues in Q2 of FY13. The domestic Indian Pharma market continued its strong performance owing to the new product launches," Barclays Equity Research analyst Rohit Goel said in a report here.
Owing to strong high-teen growth levels in the domestic market, the share has gone up to 32% at Rs 15,394.9 crore in Q2 FY 12.
Domestic formulation growth at 18% year-on-year is slightly ahead of our expectations of mid-teen growth levels from India. This compares favorably with the 15% growth last year. Acute therapeutic segments grew by 11.7.2%, while chronic segment grew by 20.3%, the report said.
Operating margins continued to improve both sequentially (60bps) and on a y/y basis (280 bps), reaffirming Indian pharma's steady operating fundamentals. Glenmark, DRL and Cipla surprised on the upside while Cadila and Ranbaxy reported below expectations.
The gain in the US market share and forex aid 55% growth. The US formulations growth at 55% as against 33% in 2Q FY12 were driven by multiple major launches and were further accentuated by a 20% depreciation yoy, Goel said.
For 2Q FY13, forex gains have contributed significantly to support Cipla's and Ranbaxy's bottom-lines resulting in PAT-level individual outperformance despite overall sets of weak results. However, PAT for our coverage was 8% below our expectations because of the Rs 5.8 bn one-off provisioning taken by Sun Pharma, the report said.
Key one-offs that are unlikely to recur next year are revenues from Lexapro for Cipla, Lipodox for Sun Pharma and Lipitor to a smaller extent for Ranbaxy. Biochem acquisition (18% growth for Cadila without Biochem) also helped the strong growth trajectory.