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US is in the pink for local drugmakers

Wednesday, 31 October 2012 - 9:22am IST | Place: Bangalore | Agency: DNA
September was at once the best and worst month of the year for local drugmakers, according to analysts. While sales in the local market were weak, the players were able to increase market share in the US, riding on patent expiries.

September was at once the best and worst month of the year for local drugmakers, according to analysts. While sales in the local market were weak, the players were able to increase market share in the US, riding on patent expiries.

Indeed, Indian companies logged chart-topping sales in various post-patent product categories in the US during September, Morgan Stanley noted on Tuesday.

US sales for Glenmark, Aurobindo, Sun Pharma and Dr Reddys appear to be up by 42%, 31%, and 10% respectively, Morgan Stanley analysts Sameer Baisiwala and Saniel Chandrawat said in a note.

The $350 billion generic market in the US remains key for Indian firms, with over a third of the 431 abbreviated new drug applications or ANDAs (needed for bringing generics into the US market) approved by the USFDA last year belonging to Indian firms.

The performance in the US market came even as the Rs58,300 crore domestic market logged its lowest growth for this year during the month.

At 13%, domestic sales growth weighed in weak compared with 15-16% in the previous months, Balaji Prasad and Rohit Goel of Barclays Research said in a note dated October 17.

Anti-infectives, respiratory, dermatology and cardiovascular were the leading segments during the month, clocking growth rates of 15%, 12%, 12% and 11%, respectively, said Balaji and Goel.

“A particular month might see more growth for a particular segment in India, depending on the climatic conditions (read seasonal conditions like flu, respiratory problems, skin infections, so on) and to a certain extent the ability to spend amongst people,” reasoned Sujay Shetty, partner, PricewaterhouseCoopers.

Amit Bangia, dermatologist at the Asian Institute of Medical Sciences in Faridabad, pointed out that derma problems are on the rise due to rising stress, pollution and change in lifestyle. “Growing awareness means willingness to recognise and rectify problems on the part of people.”
Such awareness also works for the pharma sector.

“We remain optimistic about our medium- and long-term views regarding Indian pharma. However, policy changes on the domestic drug pricing could pose some near-term challenges to the sector,” wrote the Barclays duo.

Analysts had a word of caution on the US front, too.
“Firms like Teva and Mylan are too strong in the US, so challenges remain for Indian pharma,” said Ranjit Kapadia, senior vice-president, Centrum Broking.
 


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