Pharma cos to grow by 12% in FY 2014-15

Domestic pharma industry clocked 9 per cent in last fiscal

The domestic pharma industry, which had clocked a 9 per cent growth last fiscal, has recovered the growth rate to 11.9 per cent in October this year, with a 2.6 per cent rise in the last six months period. Analysts expect the domestic pharma space to grow by 10-12 per cent in FY15.

A recent report from Centrum Broking said, "We expect the domestic pharma market to grow at 10-12 per cent in FY15 compared to 9 per cent in FY14. Domestic pharma market suffered in FY14 due to the adverse impact of National Pharma Pricing Policy (NPPP) and trade related issues, which have now been discounted.  We expect increase in prices of drugs in April 2014 to drive future growth."

Price increases along with rise in volumes and new product introductions outside price control will drive growth to 10-12 per cent in FY15, said Ranjit Kapadia, analyst Centrum Broking.

The domestic pharma growth rate recovered to 11.9 per cent in October 2014  from 9.3 per cent in April 2014 with 260 bps rise in six months period, the report claimed.

The growth was partly attributed to price increase of products both under price control and outside price control in April 2014.

It adds that twelve major pharma companies generated revenues of around 36 per cent in the domestic market.  

"Sun Pharmaceutical Industries and Lupin benefitted from their presence in fast growing niche therapeutic segments. MNC pharma companies Abbott (including Abbott Healthcare), Glaxo SmithKline and Pfizer had lower growth rates of 6.9 per cent, 4.5 per cent and 5.9 per cent respectively as some of their major brands witnessed price reduction under NPPP.

Further, analysts feel that drug price revision will improve growth. Pharma companies raised prices of price controlled drugs by 6.3 per cent in line with the Wholesale Price Index (WPI) in April 2014. 

Similarly, for products outside price control, drug prices have been raised up to 10 per cent. "We expect fast growing anti-diabetic and insulin segment to drive domestic growth.

We expect the top 10 therapeutic segments to grow at 12 per cent, in line with market growth, and contribute around 35 per cent of domestic revenues," the report claimed.