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IPM reported subdued growth of 4.1% yoy in Feb 2025, driven by subpar growth across both acute and chronic. IPM growth in MAT Feb 2025 stood at 7.4% yoy on a base of 8.9% yoy growth in MAT Feb 2024. We highlight that volume traction in the end-market is still a tad below normal, with pricing contributing to the bulk of the growth. In YTDFY25, IPM has grown at 7.9% yoy, which broadly aligns with our growth assumptions of 0-15% yoy organic domestic growth in FY2025E for our coverage. Within our formulations coverage, Sun, Cipla, Lupin, JB and Emcure are our preferred picks.

Ipca, JB and Zydus growth leaders; Sanofi, Alembic and GSK lag in Feb 2025

IPM grew by 4.1% yoy in Feb 2025 on a base of 7.7% yoy growth in Feb 2024. Chronic therapies grew by 5% yoy and acute therapies by 3% yoy, during the month. The bulk of the IPM growth in Feb 2025 was driven by therapies such as urology, gastro-intestinal, cardiac, neuro, derma, VMN and onco. In Feb 2025, revenues of domestic companies grew by 4.3% yoy, slightly higher than 3.2% yoy sales growth for MNC companies. Including unlisted companies, growth leaders in Feb 2025 were FDC, Ipca, JB, Zydus, Glenmark, Sun, Pfizer, Intas, Abbott, Cipla, Mankind, Lupin and Ajanta, which posted 5-14% yoy sales growth. On the other hand, key underperformers during the month were Sanofi, GSK, Alembic, Himalaya, Micro Labs and Eris, which posted sales declines of 1-5% yoy.

Market share trends: Cipla and Sun top gainers; Alkem and Ipca top losers

IPM growth of 7.4% yoy in MAT Feb 2025 (on a base of 9.0% yoy) was led by 430 bps yoy contribution from higher pricing and 230 bps yoy contribution from new launches. Volume growth contributed 80 bps to IPM growth in MAT Feb 2025. Among the top 25 companies, Cipla, Sun, Glenmark, FDC, Lupin, Mankind and Zydus have gained maximum share over the past six months. On the other hand, Alkem, Aristo, Ipca, Micro Labs, Himalaya, Cadila, Macleods and Alembic have lost maximum share in the past six months.

Risk of further acceleration in generics adoption not being adequately baked in

Seasonal fluctuations aside, we reiterate one of the key reasons for muted branded IPM volume growth (0.8% yoy in MAT Feb 2025) is continued traction in the alternate channels, including Jan Aushadhi, trade generics and private generic pharmacy chains. As highlighted in our recent report (link), factoring in the volume impact from these channels, we estimate a 120-160 bps annual dent on branded IPM growth, at least until FY2028E. With Jan Aushadhi’s rapid expansion plan (~15k stores now), there is a risk of this hit on IPM swelling further. We highlight that current domestic valuations imply the ongoing steady decline in the share of branded generics will continue and do not factor in any further growth deceleration in the next few years. If the share of branded slips further, there is a scope for further derating. Yet, a forced change might be ineffective unless the quality conundrum is addressed.

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