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Bounce back
Pick up in domestic pharmaceutical market growth is a positive for the
pharma sector. As per AIOCD, domestic market growth stood at 14.4%
one of the strongest month in 2011. Single digit growth in July was a bit
concerning and increasing competition and discounts were part of the
reason. Among the larger Indian pharma names, Sun Pharma and Lupin
have been the most consistent in growth throughout the year while Cipla
and Dr Reddy’s have been consistent laggards.
Domestic growth rebounds
q Domestic formulations growth for the month August 2011 rebounded to
healthy 14.4% from single digit growth in July.
q July was the only month in 2011 to have seen single digit growth.
q Over the recent years, we have seen domestic pharma growth improve
from c. 10% in 2005 to 14%+ in recent years. CY11 has been a bit slow
especially the recent months.
q Hence, single digit market growth and slowdown in both acute and
chronic therapy growth rates in July was a bit concerning.
q Apart from slow growth in acute therapies, volume discounts by some of
the companies have been contributing to growth pressures in our view.
Growth drivers intact
q We believe that the growth drivers (improving healthcare access and
increasing affordability) continue to be intact and a slower growth, if any,
might be an interim phenomenon.
q Competition has been increasing with a couple of MNC pharma companies
that have become aggressive in launching generics and have enhanced
marketing efforts.
q However, we do not see this as disrupting market growth as number of
their launches remains much lower than local Indian pharma companies.
Sun Pharma and Lupin have been most consistent
q Among the larger Indian pharma names, Sun Pharma and Lupin have
been the most consistent in growth throughout the year.
q Cadila and IPCA have seen their growth rates slip in last two months
while domestic growth for Cipla and Dr. Reddy’s have been weak
throughout the year.
q Volume discounts by some of the companies have also been contributing
to growth pressures in our view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bounce back
Pick up in domestic pharmaceutical market growth is a positive for the
pharma sector. As per AIOCD, domestic market growth stood at 14.4%
one of the strongest month in 2011. Single digit growth in July was a bit
concerning and increasing competition and discounts were part of the
reason. Among the larger Indian pharma names, Sun Pharma and Lupin
have been the most consistent in growth throughout the year while Cipla
and Dr Reddy’s have been consistent laggards.
Domestic growth rebounds
q Domestic formulations growth for the month August 2011 rebounded to
healthy 14.4% from single digit growth in July.
q July was the only month in 2011 to have seen single digit growth.
q Over the recent years, we have seen domestic pharma growth improve
from c. 10% in 2005 to 14%+ in recent years. CY11 has been a bit slow
especially the recent months.
q Hence, single digit market growth and slowdown in both acute and
chronic therapy growth rates in July was a bit concerning.
q Apart from slow growth in acute therapies, volume discounts by some of
the companies have been contributing to growth pressures in our view.
Growth drivers intact
q We believe that the growth drivers (improving healthcare access and
increasing affordability) continue to be intact and a slower growth, if any,
might be an interim phenomenon.
q Competition has been increasing with a couple of MNC pharma companies
that have become aggressive in launching generics and have enhanced
marketing efforts.
q However, we do not see this as disrupting market growth as number of
their launches remains much lower than local Indian pharma companies.
Sun Pharma and Lupin have been most consistent
q Among the larger Indian pharma names, Sun Pharma and Lupin have
been the most consistent in growth throughout the year.
q Cadila and IPCA have seen their growth rates slip in last two months
while domestic growth for Cipla and Dr. Reddy’s have been weak
throughout the year.
q Volume discounts by some of the companies have also been contributing
to growth pressures in our view.
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