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IPM Pulse: Acute growth recovers

IPM’s growth of ~7%YoY in 2Q (8.6% in Sep’23) was dragged by lower acute segment sales. IPM grew 10.3%YoY based on MAT Sep’23 driven by 4.6% price, 2.8% volume and 2.9% NI growth. Monthly volume trends have remained subdued over the last few months. Few companies such as SUNP have largely reported positive volumes. Acute therapy growth recovered to 9% (after 2 weak months) while chronic segment growth sustained at 9%. All top therapies reported positive growth led by Oncology (+23%), Anti-Infectives (+12%) and Urology (+11%). Top performers in the listed universe were IPCA (+14%), Alkem (+12%) and JB Pharma (+10%). Our coverage outperformers were IPCA, SUNP and DRRD while ZYDUSLIF, CIPLA and TRP underperformed IPM. Overall, we expect our coverage universe to deliver double digit domestic growth. Among domestic MNCs, Abbott (+10% YoY) continued to outperform peers Reported growth of companies reflect price revision impact for drugs under DPCO (~19% of IPM) gradually offset by WPI linked price increases (~12%) wef Apr’23. We believe price growth of 5-7%, NI of 2-3% and volume growth of 2-4% will drive FY24 IPM growth of early double digits.  

*  SUNP, IPCA outperform; ALPM, ZYDUSLIF lag: Based on Sep’23 MAT IPM data Sun retained its top spot with 8% market share (ms). In Sep’23, Glenmark, ALPM and Eris improved their rank by 1 each to 15, 20, and 23, respectively. From our coverage, SUNP, IPCA and DRRD outperformed the IPM growing 9.4%/13.7%/9.1%YoY respectively in Sep’23. ZYDUSLIF, CIPLA and ALPM underperformed the IPM due to lower acute tailwinds. We expect chronic-focused players to continue to deliver double digit growth. Among MNCs, Abbott outperformed the IPM yet again. 

*  Volume growth is still subdued: IPM growth of 10.3% based on MAT Sep’23 was driven by price growth of 4.6%, NI growth of 2.9% and volume growth of 2.8%. Volumes grew by 1% in Sep’23 arresting the negative momentum over the past few months. GI, AntiInfectives and Respiratory reported positive growth while other therapies reported negative volume growth. TRP has reported negative volumes since Apr’23. We expect WPI linked price increases wef Apr’23 of ~12% to gradually offset earlier NLEM price revision impact. Overall, we expect early double digit growth for IPM in FY24 driven by Price growth of 5-7%, NI of 2-3% and volume growth of 2-4%. 

* Cardiac growth continues: IPM’s top therapy- Cardiac delivered 8%YoY growth in Sep’23 largely in line with the past few months’ trend. Acute and Chronic therapies reported 9%YoY growth in Sep’23. Recovery of acute growth after two months of underperformance is a positive, in our view. Therapy growth in Sep’23 was dragged by VMN, Derma and Gynaecology among others. In the Anti-diabetic segment, Alkem, ZYDUSLIF and SUNP reported very strong double digit growth while Sanofi’s growth declined 9%. Ipca reported 17%YoY growth in Sep’23 in Pain (c. +7ppt vs. market) led by growth in Zerodol-SP. While Derma grew 3% in Sep’23, TRP has consistently outperformed the segment by growing in high single digits. In respiratory, Dr Reddy’s growth recovered to +19%YoY in Sep’23.  

* Sep’23 Top brands performance: Cipla’s top 10 brands reported 11%YoY growth. Zydus’ Lipaglyn and TRP’s Shelcal XT grew 25%/24%YoY maintaining their stellar double digit trajectory. IPCA’s Zerodol franchise witnessed growth led by Zerodol-SP growing 30%. Vaccine sales growth is recovering, as expected, for Abbott (Influvac, +38%) and GLXO (Infranrix Hexa, +39%). JB Pharma’s Azmarda declined despite continued volume rampup. LPC’s sales in Ondero and Ondero-Met declined -41%YoY/-28%YoY, respectively in Sep’23 (patent expiry in Aug’23). Sun’s Top 26-50 grew 11%YoY. Sanofi’s Lantus declined -17%YoY in Sep’23 (Toujeou grew +20%YoY).  

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