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IPM growth momentum continues on low base and Covid tailwind

* According to IMS, the Indian Pharma Market (IPM) continued its strong growth momentum with 47% yoy growth in May’21, driven by high Covid-19-related sales and a low base. On a MAT basis, IPM grew 14%, on new product growth (5.1%), volume growth (4.4%) and pricing growth (4.3%).

* All major therapies posted double-digit growth in May’21. While chronic therapies continued their growth momentum, acute therapies stole the show with Anti-infective growing at 136% yoy, respiratory at 117% and antiviral at 747%. VMNS therapy grew 56% yoy.

* Within our coverage, Cipla and Dr. Reddy’s grew the fastest at 75.1% yoy, followed by Cadila (42%). Sun Pharma, Ipca and Lupin reported growth of 30%, 38% and 41%, respectively. Other notable outperformers are Glenmark (127%), Alkem (86%), Aristo (76%) and Macleods (57%).

* We expect domestic revenue growth for our coverage companies to be robust in FY22. However, IPM growth momentum is expected to slow down in the coming months as Covid tailwind fades. Our top picks are DRL (Buy, TP Rs5,700) and Cipla (Buy, TP Rs1,000).

SUNP (+30% yoy): Top-3 therapies – Neuro (+11%), Cardiac (+17.6%) and Gastro (+35.6%). All major therapies posted double-digit growth. Total volumes grew 19.3%. Top-10 brands grew 23.6% yoy, Top 11-25 brands grew 20.6%, and the rest of the brands grew 33.9%.

CIPLA (+75% yoy): Top-3 therapies – Respiratory (+94.3%), Anti-infectives (+152.2%) and Cardiac (+11.2%). All therapies except Urology, Neurology, Blood-related and anti-parasitic grew at doubledigits. Total volumes grew 65.3%. Top-10 brands grew 135% yoy, Top 11-25 brands recorded 54.1% growth, and the rest of the brands grew 56%.

LPC (+41% yoy): Top-3 therapies – Cardiac (+48.5%), Anti-Diabetic (+20.8%) and Respiratory (+88.7%). Total volume grew 32.2%. Top-10 brands grew 25.5% yoy, Top 11-25 brands posted 76.4% growth, and the rest of the brands grew 39.4%.

CDH (+42% yoy): Top-3 therapies – Respiratory (+85.9%), Anti-infectives (+131%) and Cardiac (+12.4%). Top-10 brands grew 33.6% yoy, Top 11-25 brands grew 41.8%, and the rest of the brands grew 45.7%.

DRRD (+75% yoy): Top-3 therapies – Gastro (+59.7%), Respiratory (+183.7%) and Cardiac (+54.5%). Volume growth was 57.5%. Top-10 brands posted 103.9% yoy growth, Top 11-25 brands grew 61.7%, while the rest of the brands grew 66.4%.

IPCA (+38% yoy): Top-3 therapies – Pain/Analgesic (+27.7%), Cardiac (+10.3%) and Antiinfectives (+240.9%). Antineoplast was the only major therapy to post a decline (14%). Total volume grew 34%. Top-10 brands were up 18.3% yoy, Top 11-25 brands grew 71%, and the rest of the brands grew 45.8%.

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