Shares of pharmaceutical companies are hogging limelight this week after the Ministry of Health & Family Welfare banned sale of over 300 fixed-dose combinations (FDC) in India with immediate effect. As a result, pharma majors such as Pfizer, Abbott and Procter & Gamble Hygiene & Health Care have already stopped selling their products like Corex cough syrup, Phensedyl syrup and Vicks Action 500 Extra, respectively.
The share price of Pfizer tumbled 9 per cent to Rs 1754.70 on Monday. However, Abbott India inched up marginally 0.23 per cent to Rs 4,868.25. The benchmark Nifty Pharma index gained 0.20 per cent on March 14.
Shares of Procter & Gamble Hygiene & Health Care were trading 1.51 per cent down at Rs 6,035.65 in the noon trade.
Overall, estimates suggest the move may jolt most pharma companies down to the smallest drug units. According to AIOCD AWACS, Abbott may take a hit of Rs 453 crore (about 8.6 per cent of total sales) on account of the move while Pfizer may take a hit of Rs 325.70 crore (12.9 per cent of sales). Sales of other pharma companies such as Alkem Laboratories, Sun Pharma and IPCA Laboratories might be impacted by Rs 144.70 crore (5.1 per cent), Rs 135 crore (1.8 per cent) and Rs 117 crore (10.8 per cent), respectively.
FDC are combinations of two or more drugs in fixed doses, traditionally made to improve therapeutic effect and patient convenience. According to AIOCD AWACS, FDC sales have grown at a fast pace and account for almost 45 per cent of India’s pharmaceutical market. The 350 FDCs banned account for Rs 3,000-3500 crore, or 3.5 per cent of domestic pharma market. AIOCD AWACS is a pharma research company.
Cough syrups, triple-combination anti-diabetes drugs and combination pain-killers are some of the categories most affected due to this ban.
Company-wise, based on preliminary assessment by AIOCD AWACS, Abbott and Pfizer will be most affected given their strong cough syrup brands.
Panderm Plus, a combination anti-fungal cream by Macleods and Sumo by Alkem Laboratories, respectively, are also among impacted drugs. Shares of Alkem Labs plunged 0.97 per cent to Rs 1354 on Monday.
G Chokkalingam, founder, Equinomics Research & Advisory, said, “Overall pharma companies are going through tough times. I would stick to mid-cap pharma companies which are relatively less dependent on developed markets like Biocon and JB Chemicals.”
Nomura in a research report, said, “The government ban on FDCs is clearly an incremental negative for the companies affected. However, we believe the impact to an extent will be negated by the launch of reformulated products under same brand names. In cases such as combination antidiabetes and pain drugs, the volumes could shift to other products within the company, if such alternatives exist. In the case of Alkem, despite the ban on Taxim AZ, we believe the volumes could shift to other Taxim brands.”
