Pharma companies hope to post double-digit growth following cap on price of formulation packs

HYDERABAD: India’s pharmaceutical industry hopes to post double-digit growth this fiscal following the drug price regulator’s decision to scrap its July order to cap prices of 108 formulation packs of anti-diabetic and cardiovascular drugs.

Analysts say the 18.8% growth in September compared to the year-ago period, the highest in recent months, has raised hopes of a better performance than last year. Sales revenue grew 9% in 2013-14. "The growth rate will be 12-14% for the current financial year,"said Alok Dalal, analyst with Motilal Oswal securities.

Drug makers had suffered a steep fall in sales revenue last year after 348 drugs were included in the National List of Essential Medicines (NELM) to a list of 74 drugs till May 15, 2013.

According to analysts, ector reported a healthy growth in September on account of a low base and high contribution of volume growth in both NELM and non-NELM drugs. Though there was significant growth in therapies across segments, revenue from acute therapy drugs grew two to four times while chronic therapy drugs saw growth of up to two times compared with the year-ago period.

Analysts attribute the sales revenue growth of acute therapy drugs at 19.8% in September, highest since April 2013, to seasonal spike, benefits of lower base in 2013 and benefits of price rise in April 2014.

Within the acute therapy drugs category, respiratory drugs segment witnessed a strong turnaround with 28.6% growth in September after sliding over the past five-six months,said Surajit Pal, analyst with Prabhudas Lilladher, in his latest report last week. In September, the domestic pharma market grew to Rs 80,500 crore while the monthly sales stood at Rs 7,740 crore.

According to Pal, the industry saw broad-based growth in September, when 46% of the companies in top 50 and 45% therapeutic areas surpassed the industry growth rate.

"Incrementally, non-NLEM drugs contributed 91% of growth in formulation sales in September 2014. We believe benefits from withdrawal of price cap in cardiac and antidiabetic drugs have partially helped increase growth of non-NLEM drugs,"he said.