The domestic growth during July was 15.6%, a tad lower than 16.5% and 17% reported in May and June 2012 respectively, which points to some slowdown in the growth trajectory due to poor monsoons. Further break -down of the growth indicates that this slower traction was on account of a slowdown in acute segment, which enjoys a seasonally strong demand during July-Sept. The acute growth during July has dropped to 13.7% from 16.5% in May while the growth within chronic sustains a strong trend from 17.6% in May to 21.8% in July. We thus believe that the poor monsoon could have a higher impact on the growth of frontline acute players such as GSK, Ranbaxy and Cipla among large caps and FDC, Alembic and IPCA among mid-caps. Chronic focused players such as Sun Pharma, Lupin, Glenmark continue to report a strong growth trend.
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Key takeaways from trends during July
· The domestic pharma market grew by 15.6% (ex-bonus) during July, led by 13.7% growth in acute and 21.8% within chronic segment.
· Within acute segment, anti-infectives, pain management and respiratory grew by 8%, 11% and 4% respectively while gastro, derma and multi-vitamins continue to report 17%-18% growth each.
· Anti-malaria growth was strong at 30% even though our channel checks indicated that the season remained poor for malaria due to erratic rainfall.
· Within chronic CVS, CNS and Diabetes maintained a robust growth momentum (CNS growth was the strongest at 18% from 11% in May)
· Key outperformers include Sun Pharma (27%), Lupin (21%), and Zydus Cadila (21%) among large caps and IPCA (29%) and Glenmark (20.5%) among mid caps. Glenmark has seen a meaningful expansion in contribution from chronic segment to total franchise (up 7%, from 24% in June 2011 to 31% in July 2012).
· MNC pack excluding Ranbaxy (7%) continues to outperform Indian peers and market though Pfizer’s growth (24%) is not reflective of its primary trend. We anticipate a lower traction due to reshuffling of the management and high attrition levels in the company.
· Key underperformers include Cipla (7%), Ranbaxy and DRRD (8.8%) among large caps and Torrent (5.5%) in the mid-cap space.
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