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Published on 23/09/2020 11:53:57 AM | Source: Emkay Global Financial Services Ltd

Pharmaceuticals Sector Update - July growth tapers down to 0.9% By Emkay Global

Posted in Broking Firm Views - Sector Report| #Pharma Sector #Emkay Global Financial Services Ltd. #Sector Report

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July growth tapers down to 0.9%

* IPM sales remained flat yoy in Jul-20 (+0.9%), implying that the recovery in Jun’20 was more due to replenished demand, as the initial upstocking in Mar-Apr got depleted. Volumes were down 5% yoy. On a MAT basis, IPM growth stood at 5.5% yoy.

* Chronic therapies continued to outperform - led by Cardiac (+12% yoy), Anti-Diabetic (+7% yoy) and Neuro (+7% yoy), while acute therapies - Anti-Infective (-16% yoy), Gastro (-1% yoy), Respiratory (+4% yoy) and Pain (-6% yoy) underperformed.

* Within our coverage universe, Cipla (+13% yoy), Glenmark (+20% yoy) and IPCA (+13% yoy) posted strong double-digit growth. SUNP, CDH, TRP and LPC reported low-single digit growth, while DRRD saw the 5 th consecutive month of decline in sales.

* With no MR push amid lockdowns, top brands for most companies have done well, given their higher recall. Overall, IPM growth has now moderated to 5.5% yoy for MAT Jul-20. Although lockdowns across the country have partially eased, return to normalcy for hospitals & clinics will be only gradual, as per our checks. Cipla, ARBP, IPCA, Divi’s and GRAN are our top picks.

 

SUNP (+2.6% yoy): Neuro (+13% yoy)/Gastro (+3.5% yoy) outperformed industry growth, while other major therapies like Cardiac (+6% yoy) and Anti-Diabetic (+5% yoy) lagged behind. Overall Top-10 products grew 15% yoy. Volumes were down 3% yoy.

 

CIPLA (+12.9% yoy): Cipla outperformed overall industry as the top therapy – Respiratory grew 43% yoy. Anti-Virals were up 70% yoy on account of Covid-19-related drug sales. Top-10 products grew 19% yoy. Volumes were down 4% yoy.

 

LPC (+2% yoy): Top-2 therapies – Anti-Diabetic (+13% yoy) and Cardiac (+16 % yoy) outperformed, while others dragged overall growth. Volumes were down 11% yoy.

 

TRP (+4.6% yoy): Top-5 therapies grew 9% yoy, given the chronic skew of the portfolio. Top-25 products grew 15% yoy, and growth was dragged largely due to tail brands. Volumes continued to be weak (-6% yoy). On a MAT basis, TRP grew at 6.3% yoy, of which price-led growth was around 7.8% while volumes were down 3% yoy

 

IPCA (+12.6% yoy): Continues to beat industry growth on the back of strong growth in Zerodol and HCQS. On a MAT basis, IPCA grew 18% yoy, consistently outperforming peers.

 

GNP (+20% yoy): Sales were led by Anti-Viral sales as GNP launched the first Covid-19 drug – Favipiravir (IMS shows July’20 sales of Rs48mn). Derma was largely flat yoy, while Cardiac (+13% yoy) and Anti-Diabetic (+20% yoy) outperformed the industry. Volumes were down 2% yoy.

 

CDH (+1.7% yoy): Higher acute portfolio skew impacted overall growth. Anti-infectives were down 21% yoy. Top-10 products grew 12% yoy. Volumes were down 3% yoy.

 

DRRD (-2.5% yoy): Higher acute portfolio skew impacted overall growth, with Top-5 therapies being flat yoy. On a MAT basis, DRRD saw the highest volume decline (-8.5% yoy).

 

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