Abbott excels on power of brands, outpaces MNC peers on sales growth

Abbott India, the listed subsidiary of the US-based pharma giant, has outpaced its multinational peers to register a 14.6 per cent growth in sales to Rs 25.19 billion in nine months of the current financial.

The growth has come at a time when GST implementation affected most Indian pharma companies including Abbott’s MNC peers. Some of their products have also been impacted by growing list of NLEM (National List of Essential Medicines) products.

This saw UK based GlaxoSmithKline and the US-based Pfizer report negative sales growth of respectively 2 per cent and 5.2 per cent in this period to Rs 21.47 billion and Rs 14.49 billion.

“The growth of the Indian Pharma market (IPM) over the last 8 quarters has been continuously slowing. While GST, demonetization disrupted sales for 1-2 months, we believe the real reason for weak growth of 5.5 per cent in Dec 2017 was the absence of price-related growth over the last twelve months ended Dec 2017,” said Kartik Mehta, analyst with Dutsche Bank Market Research.

The MAT growth (moving annual total) of IPM was low at 5.5 per cent in December 2017 than 10.4 per cent in MAT for a year ago period. While price related growth in this period has been negative at -4.2 per cent for NLEM against 1 per cent, that for Non-NLEM it has been 7 per cent against 12 per cent.

As per AIOCD AWACS December’17 monthly data, 17 of Abbott’s brands are listed among the top 500 domestic pharma products.  

“These brands contributed about 24 per cent to company’s revenues. Ten of these grew faster than the market growth rate of 7.8 per cent. We expect these ten brands to drive future growth,” said Ranjit Kapadia, an analyst with domestic brokerage Centrum. Its two brands Thyronorm has reported 43 per cent growth despite being under price control (NLEM).

The company also distributes Novo Nordisk’s anti-diabetic range of products in India. These products contributed about 16 per cent to the company’s revenues. Also 3 out of 6 Novo Nordisk products distributed, grew faster than the market growth rate of 7.8 per cent, indicating a strong brand image. Human Mixtard is the largest selling insulin brand in the domestic market which grew by 8.6 per cent against the industry growth of 7.8 per cent.

As the insulin brands are under price control and the company distributes these products in the domestic market, sales growth is recorded at the back of higher volume. The company receives a distribution margin from Novo Nordisk.

The company also started its new vaccine division and launched four new vaccines during 2015-16. It has entered into strategic tie-ups with Bharat Biotech for supplying these vaccines. It is also looking for partnership and alliances for other vaccines as it intends to become No 3 player in this segment. “We expect the vaccines to drive future growth due to limited competition and wider usage,” said  Kapadia. 

Rs Billion		Net Sales						Net Profit
Co_Name	Group	201606	201609	201612	201706	201709	201712	201606	201609	201612	201706	201709	201712
Abbott India	MNC Asc-Abbott	7.47	7.21	7.29	8.81	9.31	7.06	0.86	0.75	0.74	1.15	1.38	0.48
Glaxosmi. Pharma	MNC Asc-Glaxo	7.06	7.99	6.85	7.04	8.36	6.07	0.53	0.99	0.72	0.9	1.3	0.26
Sanofi India*	MNC Associate	5.78	5.97		5.56	6.27		0.86	0.83		0.74	1.16
Pfizer	MNC Associate	4.91	5.36	5.01	4.57	5.71	4.21	0.62	1.26	0.8	0.87	1.11	0.57
Merck*	MNC Associate	2.61	2.63		2.59	3.06		0.23	0.29		0.2	0.32
Novartis India	MNC Associate	1.64	1.75	1.71	1.56	1.68	1.15	0.13	0.22	0.19	0.19	0.26	0.07
Astrazeneca Phar	MNC Associate	1.5	1.38	1.4	1.29	1.64	1.27	0.16	0.01	0.13	-0.1	0.27	0.06

		Net Sales			Net Profit
Rs Billion		9 Months			9 Months
Co_Name	Group	FY2017	FY2018	% Chg	FY2017	FY2018	% Chg
Abbott India	MNC Asc-Abbott	21.97	25.19	14.64	2.35	3.01	28.38
Glaxosmi. Pharma	MNC Asc-Glaxo	21.91	21.47	-1.98	2.24	2.46	9.98
Sanofi India*	MNC Associate	17.63	17.75	0.68	2.54	2.85	12.2
Pfizer	MNC Associate	15.28	14.49	-5.21	2.69	2.56	-4.9
Merck*	MNC Associate	7.86	8.48	7.89	0.78	0.78	0
Novartis India	MNC Associate	5.11	4.39	-14.13	0.54	0.52	-4.46
Astrazeneca Phar	MNC Associate	4.28	4.2	-1.8	0.3	0.23	-22.9

*Sanofi India & Merck results are 6 months converted into 9 months

Source: Capitaline

Compiled by BS Research Bureau