Published on 21/10/2019 10:47:20 AM | Source: Motilal Oswal Ltd

Health Sector - IPM momentum intact; volume growth picks up By Motilal Oswal

Posted in Broking Firm Views - Sector Report| #Motilal Oswal #Sector Report #Health

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IPM momentum intact; volume growth picks up

*  IPM growth improved to 11.9% YoY in Sep’19 from 9.4% YoY in the previous month, led by price (+5.6% YoY) and new launches (+2.9% YoY). Volume growth too accelerated to 3.5% YoY from 1.1% YoY in Aug’19.

*  For the three months ended Sep’19, growth was at 11.5% YoY, driven by price (+5.5% YoY) and new launches (+2.8% YoY). Volume growth was better at 3.2% (v/s 1.5% in three months ended Aug’19). Notably, both NLEM and non-NLEM products growth was healthy at 11.4% YoY and 9.7% YoY, respectively, for the quarter.

*  On a MAT basis, industry grew by 9.8% YoY in Sep’19, with price growth at 5.2% YoY, volume growth at 1.9% YoY and new launch growth at 2.7% YoY


Growth driven by volumes in NLEM and price/new launches in non-NLEM

*  In value terms, secondary sales growth was at 13.2% YoY in NLEM (~10% of IPM) and 11.8% YoY in non-NLEM (~86% of IPM) in Sep’19.

*  Growth in NLEM products was driven by volumes (+8% YoY), while that in nonNLEM products was led by price (+5.6% YoY) and new launches (+3.3% YoY).


JB Chemicals, Dr. Reddy’s, Glaxo – outperformers for the month

*  JB Chemical (+28% YoY) exhibited highest growth in Sep’19, followed by Dr. Reddy’s (+24% YoY) and Glaxo (+23% YoY).

* JB Chemicals’ performance was driven by strong double-digit growth in its top brands, especially in Cardiac. Glaxo was supported by strong growth in Vaccines (+29.8% YoY), followed by Anti- Infectives (+28.5% YoY). Dr. Reddy’s growth was driven by Derma/Gastro intestinal (+27.1%/+27.9% YoY).

*  Sun Pharma’s sales improved to 13.1% YoY from 9.9% YoY in Aug’19, mainly led by Anti-Infectives (+16.3% YoY).

* Secondary sales growth was muted for Ajanta (+5.7% YoY), Alembic (+0.2% YoY), and Natco (+5.2% YoY).

 * On a MAT basis, Torrent and JB Chemicals reported highest price growth of 8.2% and 8.9%, respectively, while AstraZeneca delivered highest growth in new product launches (+5.5%).


Anti- Diabetics and Cardiac stand out among therapies

* Anti-diabetics (~10% of IPM) exhibited highest growth (+14.2% YoY) among therapies in Sep’19, followed Cardiac (12.5% of IPM; +13.7% YoY) and Pain/Analgesic (7% of IPM; +12.6% YoY). Respiratory (7% of IPM) and Gynecological (5% of IPM) grew moderately by ~8% YoY.


MNCs exhibited better growth than Indian companies

*  In Sep’19, approved-FDC (~48% of IPM) and single molecules (~52% of IPM) grew by 12.3% and 12.5%, respectively. Indian companies grew at a slower rate (+11.6% YoY) than MNCs (+13.5% YoY).


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