Pharma market researchers clash over numbers

Written by Soma Das | New Delhi | Updated: Aug 30 2012, 06:21am hrs
Erratic monsoon, notorious for harassing farmers, is causing differences in unexpected quarters. A clash has erupted between IMS Health and Aiocd Awacs (Aiocd) two of the largest market research agencies mapping the R60,00-crore Indian pharma retail market on whose set of numbers track the market more accurately.

A significant gap in how the drug market has fared, particularly in the monsoon season of April to June quarter as well as the month of July has sparked tension in the industry and between these two firms.

For the month of July, Aiocd maintained that the market continued to grow at a healthy 15.6% while IMS reported a slowdown, pegging the growth at 3.4%. In June, too, IMS declared a growth of 7% of the industry while Aiocd went with an estimate of 16%. For the April-June quarter, IMSs growth estimates stood at just over 10% against Aiocds figures of over 17%.

These discrepancies apparently flooded the agencies with queries of clients, which include pharma companies, analysts from brokerage firms and consultancies, among other stakeholders, prompting one of the two firms to commission a study to understand the reasons behind the variance.

Admitting the disagreement over growth figures, in a letter sent to its clients late last Friday, Aiocd said, There has been a significant gap in growth rates being reported by the two audits IMS & PharmaTrac (Aiocd). The gap is so huge that the entire direction of the market and strategy of a company can get altered. The disconnect in growth rates had been significant even in the April-June quarter (due to which we at Aiocd Awacs had commissioned a study with Edelweiss Research.

Edelweiss in its study plotted a three way comparison of April-June growth rates as put out by Aiocd, IMS and domestic formulations results announced by listed companies. In the case of 10 out of 13 companies (Sun Pharma, GSK, Cipla, Zydus Cadila, Ranbaxy, Ipca Labs, Alembic, Unichem, FDC), Aiocd Awacs was more accurate than IMS, results for two out of 13 (Dr Reddys, Torrent Pharma) were similar and in case of one out of the 13 (Glenmark), IMS was more accurate than Aiocd in projecting growth rates, the Aiocd letter said.

The interesting part is, even while projecting the market growth at 17.2%, Aiocd Awacs has erred on the lower side, Aiocd claimed further.

IMS attributed the slowdown to lower-than-expected monsoon progression. Acute therapies that are closely interlinked with the monsoon season and contribute significantly to the market have a posted a 1% growth in July. Many therapies have seen negative growth such as anti-infectives (-4%), cough preparations (-30%), anti-malarials (-18%), said Sushil Gulati, director, commercial, IMS Health.

Usually the monsoon and post-monsoon season sees a clear spike in sales of drugs propelled by a seasonal swell in anti-infectives, cough preparations and other acute therapies.

The mismatch in data comes as a suprise as the methodology of data collection employed by the firms involve collection of data from wholesale points even though the exact reference groups may be different.

Stakeholders across the board refused to take sides. Correct growth figure could actually be somewhere in the middle of the estimates of the two agencies, pharma companies executives FE spoke to said. A former IMS Health executive turned consultant pointed out that primary sales figures get translated into real sales only with a lag. So it would be worthwhile to wait and watch for the August figures, he added.

We continue to cross-check our internal systems plus rely on regular feedback from our clients on their internal growth rates to gain a better understanding and ensure our reflections in value and growth rates remain closer to reality, it added. IMS Health said, We will be providing guidance for the rest of the year and 2013 once there is stability and clarity on market events.

The direction of growth figures form the basis on which pharma companies take decisions, like what therapies to bet on, while investors decide which sub-sectors, companies and markets they should park their funds with.

Number game

* In June, IMS had declared a growth of 7% of the industry while Aiocd went with an estimate of 16%

* For July, Aiocd said the market continued to grow at 15.6% while IMS reported a slowdown, pegging the growth at 3.4%

* For the April-June quarter, IMSs growth estimates stood at just over 10% against Aiocds figures of over 17%