Pharma Sector Update : IPM pulse—sedate start to the year Kotak Institutional Equities
IPM pulse—sedate start to the year
Raising concerns of another fiscal year of relatively sluggish growth, IPM growth stayed muted at 6.9% yoy in May 2025, after a print of 7.5% yoy in April. IPM growth in MAT May 2025 stood at 7.6% yoy versus 7.3% yoy growth in MAT May 2024. We highlight that, although pricing contributed to the bulk of the growth, volume traction in the end-market still remains sluggish. However, we expect a slightly stronger acute season, along with pricing, acquisitions and in-licensing deals, to drive 10-23% yoy growth in FY2026E domestic sales for our coverage. Sun, Cipla, Lupin, Emcure and JB are our preferred picks.
GNP, JB and Ajanta growth leaders; Pfizer and Sanofi lag in May 2025
Chronic therapies grew by 10% yoy and acute therapies by 5% yoy in May 2025. The bulk of the IPM growth in May 2025 was driven by therapies such as oncology, cardiac, respiratory, neuro and urology. Including unlisted companies, growth leaders in May 2025 were Glenmark, JB, Ajanta, Sun, Intas, Dr Reddy’s, Mankind, Abbott, Ipca, Zydus, Indoco, Torrent, Emcure, USV, Alkem and Aristo, which posted 6-12% yoy sales growth. On the other hand, key underperformers during the month were Himalaya, Pfizer, Sanofi, Cadila, Alembic, GSK, Micro Labs and Eris, which posted sales growth of (-)4 to 3% yoy
Market share trends: FDC and TRP top gainers; Cipla and Alkem top losers
IPM growth of 7.6% yoy in MAT May 2025 (on a base of 7.3% yoy) was led by 420 bps yoy contribution from higher pricing and 230 bps yoy contribution from new launches. Volume growth contributed 110 bps to IPM growth in MAT May 2025, much higher than the nil contribution to IPM growth in MAT May 2024. Among the top 25 companies, FDC, Torrent, Intas, USV, Abbott, Lupin, Emcure, JB, Mankind and Ipca have gained maximum share over the past six months. On the other hand, Cipla, Aristo, Alkem, GSK, Alembic, Sun and Glenmark have lost maximum share in the past six months. Among top brands for the month, Glycomet-GP is ranked the No. 1 brand with a gain of 2 ranks and growth of 7% yoy, while Mounjaro has moved into the Top 15 brands with sales of Rs520 mn in May 2025.
Risk of further acceleration in generics adoption not being adequately baked in
We reiterate one of the key reasons for muted branded IPM volume growth 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 scope for further derating. Yet, a forced change might be ineffective unless the quality conundrum is addressed.
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