Pharma industry hit by worst slowdown in the domestic market for the month of August

The Indian pharma industry, while being on a roll due to the higher export realisations due to the weaker rupee, has suffered badly in the domestic market. According to the latest data released by market research firm AIOCDAWACS, the domestic pharma market grew by mere 1.1% for the month of August, which is a record low for the industry. The last low growth experienced in the market was recorded in November 2012 at 4.3%.

One of the major reasons for the slowdown seems to be the de-stocking done by the trade and companies due to the uncertainty surrounding the implementation of the new drug pricing control order (DPCO). This is evident from the fact that according to the data, the growth of the DPCO portfolio of products dropped by 12.3% whereas the non-DPCO product market grew by 3.3% resulting in an overall growth of 1.1% for the month of August 2013.

The closing stock level, measured as on 10th of every month, stood at 38.8 days as on 10th of April. It however fell to 22.1 days in September 2013. The DPCO 2013 portfolio for GSK Pharma degrew by 30.4% and Ranbaxy degrew by 21.1, whereas Sun Pharma had the least impact with its DPCO 2013 portfolio degrowing at 1.7.

However, the trade-related disruptions ahead of implementation of new drug pricing policy are not the only reason for the slowdown. According to AIOCD, not only value, the market has witnessed drop in volumes too in both the DPCO and non-DPCO categories. This indicates the continuance of the slowdown trend in drug off-take, especially in the acute therapies - a phenomenon seen since more than a year now.

For the month of August 2013, amongst the top 10 companies, Sun Pharma registered the highest growth of 14.9%, Alkem 5.9% and Cipla 4.9%. The multinational drug companies figured among the worst performers with GSK Pharma witnessing a drop of 17.6%, Pfizer of 8% and Abbott 4.6%.