IPM growth recovers from April/May lows
* After falling for two straight months due to Covid-19, IPM growth recovered (+5.8% yoy) in June, led by Cardiac and Anti-Diabetes segments. Volumes fell 1% yoy (vs. 16%/13% fall in April/May). On MAT basis, IPM growth stood at 7% yoy, while volume growth was flat. Cardiac posted the strongest growth (+16% yoy) followed by Neuro (+15% yoy) and AntiDiabetic (+13% yoy). As expected, most acute therapies were under pressure led by AntiInfective (-14% yoy), Pain (+1.7% yoy) & Gastro (+3% yoy). Q1 is seasonally a strong quarter for acute therapies and the demand loss is, thus, unlikely to fully recover.
* Within our coverage universe, Ipca posted the best growth (+21%yoy), while others posted high single-digit to low double-digit growth. Dr. Reddy’s was the only laggard (-9%yoy). Notably, Torrent Pharma’s volumes rose 2% yoy after eight consecutive months of decline.
* Overall, IPM growth is now at 6.9% yoy for MAT June’20. We expect a gradual recovery from Q2 and 6-8% growth for FY21. Top picks: ARBP, Cipla, Granules and IPCA.
SUNP (+8.7% yoy): Strong growth in Neuro (+18% yoy), Cardiac (+13% yoy) and Anti-Diabetic (+11% yoy) was negated to some extent by sluggish growth in acute therapies – Anti-infective (-10% yoy), Derma (+3% yoy) and Gastro (+6% yoy). Vitamins grew strongly at 21% yoy on increased demand for immunity building products amid the Covid-19 outbreak.
CIPLA (+10.1% yoy): Top therapy Respiratory grew strongly at 18% yoy. Cardiac also saw high growth of 20% yoy. Top 10 products (30% of sales) showcased 24% yoy growth.
LPC (+8.7% yoy): Top three therapies – Anti-Diabetic (+18.8% yoy), Cardiac (+21.7% yoy) and Respiratory (+11% yoy) – outperformed the industry by a strong margin. However, acute portfolio – Anti-Infectives (-19% yoy), Gastro (+5% yoy), Pain (-6% yoy) and Gynaec (-2% yoy) – restricted overall growth. Overall volumes for the company were down 7% yoy.
TRP (+10.6% yoy): Strong growth was aided by Chronic therapies – Cardiac (+16% yoy), Neuro (+17% yoy) and Anti-Diabetic (+19% yoy). Volumes were up 2% yoy after eight consecutive months of decline.
IPCA (+20.7% yoy): IPCA remains the fastest growing amongst the top-25 companies in domestic pharma led by superior execution in Zerodol and increased sales of HCQS. Overall, top 5 products (33% of sales) are growing in excess of 40%.
CDH (+8% yoy): The company reported decent growth despite top therapy Anti-Infective falling 17% yoy. This was due to high growth witnessed in Cardiac (+17% yoy) and Gynaec (+30% yoy).
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