Drug sales grow in single digit for first time in 2011

The average growth rate (for a month in 2011 against the same month in 2010) clocked in the first quarter period ended June stood at 13.5%, according to pharma market research firm AIOCD AWACS.

Among the top drug firms, Cipla, Ranbaxy, Dr Reddy?s and Cadila Healthcare are among the most adversely affected. The domestic drug portfolios of these firms depend heavily on therapeutic areas such as anti-infectives or gastro-intestinal drugs. For instance, Ranbaxy and Cipla rely dominantly on the anti-infective segments, which contribute 35% and 25% of their domestic revenues respectively. In case of Dr Reddy?s, gastrointestinal segment, analgesic and anti-infectives contribute 24%, 12% and 10% to their domestic revenue kitty.

For Cadila Healthcare, gastrointestinal segment pitches in 17%, anti-infectives and analgesic contribute around 11% and 7% respectively. While Cipla has grown only by 2.2% in the month, the most sluggish among the top ten drug firms by market share, Dr Reddy?s and Cadila have posted 4.5% and 6% growth respectively. The performance of Ranbaxy, which has grown by 16%, almost double the industry growth, has to be seen in the context of preceding months, during which it was clocking excess of 25% in most months of 2011.

Even the management of the company, during a recent analyst call accepted that the slowdown in anti-infective market in the month of July is casting an eclipse on the firm?s overall performance in the domestic market.

Traditionally, the month of July is fraught with monsoon associated diseases such as jaundice, gastro intestinal infections like typhoid and cholera, cough and cold and brings a marked increase in sales of antibiotics and gastro intestinal drugs implying increased sales of drugs for pharma companies.

?It is clear that monthly growth rate of July has been negatively affected because the antibiotic and gastro intestinal drug sales which conventionally soar in the monsoon month of July has failed to gather up this time. However, if you look at the growth figures of the period of 12 months ended July, the growth still stands at a decent 14%, which should be a relief to the companies,? said Ranjit Kapadia, senior VP, Centrum Broking.

Some industry experts however are also debating whether a possible overall slow down could be gripping the pharma market. ?It is true that anti-infective season has not picked up, but July also indicates a slowdown across several other categories.

A sharp decline in growth rate of July ?11 versus Apr-Jun ?11 is seen in anti-infective (4.3% down), gastrointestinal (6.0% down), analgesic (5.9% down) and negative growth of anti-parasitic (anti-malarial mainly). The surprising element is that the decline is also affecting cardiac and diabetes to some extent, which are generally presumed to be immune to macro-economic and seasonal factors,? said Ameesh Masurekar, director, AIOCD AWACS.

He said the next few months would be keenly watched to decipher whether we are witnessing a general slowdown or was July a one-off month of aberration in the domestic pharma growth story.

However, among the top drug companies, Sun Pharma and Mankind have defied the norm and remained largely immune to the slowdown mainly due to the nature of their drug portfolio. While Sun recorded a growth of 18.1% in the month, Mankind grew by 19.4% in the similar period. That is because Sun has built their drug portfolio largely around chronic therapeutic areas such as neurology, cardiology, diabetology and respiratory care. These four therapeutic verticals together contribute over 60% to Sun?s domestic sales figure.