Pharma sales growth hit 19-month low in May as product launches slowed down

The domestic pharmaceuticals market clocked 7 per cent year-on-year (YoY) growth in May, the lowest since October 2017, when it registered a growth of 4.9 per cent. 

For the first time, all chronic therapy drugs grew only in single digits during May. 

According to analysts, a slew of factors were responsible for the slowdown — a weak season resulting in lower offtake (mainly acute therapy medicines), slump in product launches in the chronic segment pulling down the growth of therapy drugs, apart from the impact of price regulation in the overall market. 

“Many chronic therapy medicines for hypertension, diabetes and cardiac ailments have come under price control. The price growth in these brands has thus slowed down. Companies cannot stop production of medicines that are under price control but can reduce production by 

25 per cent every year. Several companies have done that eventually slowing the volume growth,” said a senior official of a drug firm that has a sizeable domestic portfolio. 

He said many companies were also focussing on portfolio rationalisation in the domestic market, which is resulting in a slowdown in brand launches. 

Data from market research firm AIOCD AWACS showed that chronic therapies grew in single digits for the month — anti-diabetics (9.8 per cent), cadio (9.1 per cent) and neurology (8.1 per cent). Segments like respiratory and dermatology (which can be both acute or chronic) saw a slow growth of 6.3 per cent and 5.1 per cent, respectively. 

Gastrointestinal medicine sales, too, grew by 4.4 per cent in May while vitamins and minerals clocked 6.1 per cent growth. The anti-diabetic segment registered single-digit growth for the first time in two years. 

AIOCD claimed this was the first time when all chronic care segments had slowed down to a single digit. 

“May was a weak month as such. Things may look better in June. However, overall product launches have come down, especially in the chronic segment that will drag at least 2-3 per cent growth. Many of the chronic therapy products also fall under the National List of Essential Medicines, which would drag price growth in the segment. The volume growth, in comparison, would be flat or down slightly,” said Amey Chalke, analyst with HDFC Securities. 

AIOCD data further highlighted that volume growth was negative (0.1 per cent), which it claimed was a definite sign of the market slowing down. Growth from new introductions was at 2 per cent while from price increase it was at 5.1 per cent. 

Volumes, however, have been in the slow lane for the past five months. For the March-May period, volumes in the pharmaceuticals market have grown only by 1.5 per cent. 

At the same time, new brand launches have come down in most key therapy areas. Data culled from the AIOCD showed that for the past one-year period (June 2018 to May 2019), the number of dermatology brands launched have halved compared to the year before. Between June 2018 and May 2019, 261 dermatology brands were launched compared to 554 in the same period of the previous year. 

Similarly, other therapy areas, too, saw a decline in the number of launches.