Dip in demand for Covid medicines takes a toll on drug sales in March

Covid related drugs contributed 40% of the pharma market last year

The dip in demand for Covid-19 drugs, which roughly contributed to 40 per cent of the Indian pharmaceutical market (IPM) during the pandemic period, has dragged down the overall growth of the domestic drug market in March. The IPM recorded a two per cent decline in value growth and a 9.4 per cent decline in sales volumes in March, according to Awacs data.

Monthly sales in March were Rs 12,932 crore, showed the data. The strong demand for drugs in March 2021, when India was going through the second wave of Covid infections, has led to a high base effect for March 2022.

India Ratings Research has noted in a recent report that the decline in revenues in the IPM during March 2022 was led by a lower contribution from Covid-19 related drug sales. “Sales of Covid-19 related drugs declined seven per cent YoY, contributing 33 per cent to March 2022 monthly sales. Strong volume declines were observed in key therapies such as anti-infectives (15 per cent YoY) and vitamins (11 per cent). During March 2021, the second covid wave had led to higher volume growth, and consequently, a higher base effect,” the report added.

Meanwhile, Sheetal Sapale, president of market research firm Awacs, pointed out that if one looks at the historical trends for the month of March, then the market typically grows by 9-11 per cent.

“For March 2022, the IPM reported a value degrowth of 2 per cent and units (volume) degrowth of around 9 per cent. Usually, there is 9-11 per cent growth in March historically. This is a direct impact of the high growth that the IPM had achieved during the second wave of Covid19. Segments that are highly impacted are anti-infectives, vaccines and nutritional segments,” she said.

Sapale explained that Covid-19 drugs were contributing around 40 per cent of the IPM (according to MAT March 2022, or the past 12 months data). Now as the demand for Covid drugs is coming down, the distribution between Covid and non-Covid drugs is roughly in the 30:70 ratio.

“For the month of March, Covid-19 drugs show a decline of 10.2 per cent, while non-Covid drugs have degrown by 8.8 per cent. This implies that while Covid-19 drug demand has gone down, non-Covid-19 drug sales have not recovered,” Sapale added.

There has been a weak performance across therapies (except respiratory and central nervous system) in March 2022. Acute therapies such as respiratory, anti-infective, pain-analgesics, gastro-intestinal, and vitamins witnessed sales growth of four per cent YoY, negative 19 per cent YoY, positive one per cent, negative one per cent and negative four per cent, respectively. Chronic therapies such as cardiac, anti-diabetic and CNS reported growth of one per cent YoY, one per cent YoY and three per cent YoY, respectively, during the month.

Covid influence on drug sales spanned across categories–-anti-infectives, gastrointestinal, diabetic, cardiac, vitamins and nutrients, hormones, pain related etc.

Antivirals (remdesivir, favipiravir), antibiotics (azithromycin etc), cardiac (heparins etc), diabetic (insulins), gastro (anti-diarrheal, oral electrolytes, probiotics), pain (anti-inflammatory medicines) and several other categories of drugs were used to treat Covid-19 patients, and as a result saw a rise in demand.

Another reason for the dip in volume sales could be inventory calibration ahead of the 10 per cent price rise in essential drugs.

“Channel checks also suggest inventory calibration in lieu of potential price hikes in the portfolio from April 2022,” India Ratings said.

The outlook for growth, however, remains bullish.

India Ratings said, “While the decline was observed during March 2022, Ind-Ra expects FY22 IPM to have witnessed 15% yoy sales growth, higher than 8%-10% observed over the past five years, aided by the base effect.”

Pharma industry captains too feel that the domestic branded generic formulations market can grow at 10-12 percent annually for the next few years.

Speaking at a conference in Mumbai this week, Pankaj Patel, chairman Cadila Healthcare said that the pharma market can grow when there is overall growth, and the GDP grows, because most of the spend is still out of the pocket. He added that he feels the market can clock 10-12 percent growth over the next few years.

Dilip Shanghvi, MD, Sun Pharmaeuticals said that the pharma industry growth will be few percentage points more than the GDP growth. He added that as life expectancy grows, the sales of the pharma industry also grows, as most of the chronic medication sales happen after people turn 40-45 year old.