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On a high base, volumes declined in Jan’23

The IPM in Jan’23 grew 2.3%, primarily driven by price increases (5.9%ppts) followed by new products (1.8ppts), whereas volumes declined 5.4ppts. On a MAT basis, the IPM consistently grew 6.8%, driven by a 6ppts price increase, followed by new products (1.7ppts) offset by a 0.9% drop in volumes. Therapies such as dermatology (10.5%), cardiac (6.3%), neuro/CNS (6%) grew on relatively low bases. Acutefocused therapies such as anti infectives (7.1%), respiratories (5.1%), pain (1.8%) declined in the month. Of MNCs, except Abbott+NovoNordisk (9.7%), AstraZeneca (14.6%) and Merck (45%) Macleods (5.7%), all others declined. Domestic companies like Piramal, Natco, Biocon, Eris and Intas grew in double digits, whereas Sun+Ranbaxy, Dr Reddys, Cipla, Glenmark undershot the market.

Chronic-focused companies grew in Jan. Piramal, Natco and Biocon grew the most (18-24%). Companies like Eris and Intas grew 11-12%, Ipca, JB Chemicals, Lupin, Mankind, Torrent and Zydus grew in single digits but more than the market growth. Others like Alkem (2.1%), Sun+Ranbaxy (0.9%), Ajanta (0.8%), Dr Reddys (0.2%), grew less than the market. Indoco (-11.5%), Glenmark (-5.3%), Cipla (-0.4%), Alembic (-8.6%) declined in Jan’23

Lacklustre performances from multi-national pharmas. Except Abbott+NovoNordisk (9.7%), AstraZeneca (14.6%) and Merck (45%) Macleods (5.7%), all other companies undershot the market. The most decline was seen in Novartis, Sanofi and Pfizer (8-10%).

Growth in chronic therapies. The most growth was seen in chronic-focused therapies like dermatology (10.5), cardiac (6.3%), neuro/CNS (5.9%) and antidiabetes (2.4%), primarily due to low bases. Others like VMN (0.3%), pain (- 1.8%), respiratories (-5.1%) and anti-infectives (-7.1%) undershot the market. The NLEM was modified in 2022 and an overall impact of Rs22.12bn (in Dec’22) was seen in the IPM. Therapies highly affected were anti-infectives (impact of Rs9.4bn) on some molecules being added (amoxycillin+clavulanic acid, meropenem, cefuroxime), cardiac (Rs3.4bn; telmisartan, atorvastatin, amlodipine), GI (Rs1.6bn; ranitidine, pantoprazole), anti-neoplastics (Rs1.2bn)

Our view. Demand for chronic-focused therapies such as dermatology, cardiac, neuro/CNS and anti-diabetes have picked up pace. In Jan’23, acute therapies like anti-infectives, VMN and pain declined 11-21% in volumes due to the high base of Covid-related products. Others like blood-related, ophthalmology and urology gained traction and grew in the month. Therapies like cardiac, anti-infectives, neuro/CNS, anti-neoplastics, hormones and antimalarials have the maximum portfolio coming under NLEM 2022. We maintain our positive view on chronic-therapy-focused companies such as Abbott, Ajanta, Cipla, JB Chemicals, Eris and Torrent

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