Domestic drug market bounces back in Dec, ends CY20 with 3.1% growth

Clocks 8.5% growth in December, up sharply from November's 1% due to revival in volume growth

The domestic pharmaceutical market finished 2020 on a positive note, clocking an 8.5 per cent growth in the month of December, a sharp revival from the month of November (1 per cent) riding on some revival in volume growth. 

For the full calendar year 2020, however, the growth rate slowed down to 3.1 percent in comparison to the previous year when it had clocked a 9.4 per cent growth rate. The December quarter too posted muted growth in terms of volumes (-1.9 per cent), new product introductions (3.4 per cent), while price growth was 4.9 per cent, noted analysts at Edelweiss Securities. 

The revival in the month of December was riding on some revival in volumes which posted a 0.3 per cent marginal growth when compared to November when the volumes growth had slipped to negative terrain (-6.9 per cent). The domestic drug firms continued to take price growth - AIOCD AWACS noted there was a price growth of 5 per cent in December. Pharma firms are allowed to take price growth once a year. For scheduled products it is determined by the wholesale price index, while for non-scheduled drugs it is up to 10 per cent. 

'Re-balancing' of acute and chronic segments has begun and the December quarter would show this to some extent, according to Kedar Upadhye, the global chief financial officer of Cipla. Upadhyaye had told Business Standard in December that the domestic market was re-balancing itself and acute therapies were back on growth path. 

Sheetal Sapale, president, marketing, AIOCD AWACS, a market research firm noted that 2020 has been a challenging year for many industries, but the Indian pharma market (IPM) has managed this challenge with a positive growth record. "The encouraging trendlines in the last few months are hinting towards a near normal revival for most of the players," he felt. 

Cardiac and diabetic therapies have remained resilient to market ups and downs this year. In December too cardiac therapy registered a 14.9 percent monthly growth, while anti-diabetic clocked a 9.9 percent growth. Gastrointestinal drugs sprung back to high growth trajectory with a 16.2 percent growth and vitamins maintained their strong run at a 14 percent growth. Pain and analgesics too have clocked a 6 percent growth in December compared to a negative 5.2 per cent in November. 

Drug firms too have posted double digit growth rates in the last month of the year - while Indian firms have done well, multinationals have been a mixed bag (refer chart). 

Analysts at Edelweiss noted,"Volume growth should gradually recover in the coming months as full sales force activity resumes. Glenmark, Cipla and Zydus growth indicates that Covid drugs are still driving the incremental growth and should also impact 3Q21 reported numbers."