Indian pharma has bounced back from lockdown lows. What led to turnaround?

From the lows of the lockdown, the industry has seen a robust bounceback

The domestic pharma market has not only recovered from the lows of the lockdown-hit months of April-June, but is likely to do better in the second half of the fiscal.

Pandemic blues seem to be a thing of the past as the domestic drug market showed resilience in the last three months, maintaining a growth momentum. In October, the Indian pharma market (IPM) clocked a strong 9.6 per cent growth after growing 4.5 per cent in September and 2.2 per cent in August.

Compare this with the lockdown-hit months when the IPM volume growth was down 17 per cent in April and 14.4 per cent in May.

Big firms also bounced back — from a (-)1.8 per cent in September, the country’s largest drug maker, Sun Pharmaceutical Industries, recovered to 8.4 per cent growth in October. Similarly, from a meagre 0.6 per cent growth, Dr Reddy’s posted a strong 8 per cent sales growth in October. Cipla continued its strong run, posting a 22 per cent growth, while Zydus Cadila posted 14.9 per cent growth during the month.

What led to the turnaround? Several factors are at play. From rising prescriptions (because people who were deferring doctor visits are doing so) to the pharma sales force back on the field with full vigour and companies finally finding their feet with the digital marketing strategies (new brand launches and doctor outreach programmes) — Indian drug makers have shown that medicine sales is certainly a sunshine sector. 

Chronic therapies (medicines that we need to take regularly such as cardiac or hypertension drugs) have been doing well throughout the year, but October showed that other therapy areas such as respiratory ailments (still in negative growth territory) have seen some revival.

For further momentum, Rakesh Dave, president of AIOCD AWACS, a market research firm, felt that it was critical for antibiotic sales to pick up. Antibiotics, part of anti-infectives category of therapies, induce prescription of associated therapies such as vitamins, pain and analgesics and also proton pump inhibitors (to reduce stomach acid production). When someone visits a doctor with an infection and fever, the prescription would have these supporting drugs along with antibiotics, Dave pointed out. “Sales of antivirals are up now in the anti-infectives category. If antibiotic sales also pick up, then the overall market would get a boost. Antibiotics, vitamins, PPIs and pain medicines make up over 40 per cent of the IPM,” he said.

Companies such as Cipla see demand for respiratory drugs growing in the coming months. The Mumbai-based firm, a leader in respiratory therapies, expects a surge in demand for respiratory drugs and inhalers during the coming months when winter and an anticipated second wave of Covid-19 are likely to push the demand for these medicines up. Cipla has a massive 68.7 per cent market share in the respiratory inhalation segment in India and has started working on aligning supplies so that there is no shortage of these critical medicines during the winter when pollution levels (especially in north India) and other environmental factors cause a surge in respiratory illnesses.

Add to this the Covid-19 portfolio — firms such as Cipla, Glenmark, Cadila Healthcare, DRL, Hetero that are selling key drugs like remdesivir, favipiravir and so on are witnessing traction in the segment and expect the trend to continue for one or two more quarters at least.

Cipla Global Chief Financial Officer Kedar Upadhye expects the sales of the Covid-19 portfolio (around 5 per cent of its India business now) to remain at the current level till at least the first quarter of the next fiscal. It is making around 450,000 doses of remdesivir per month now and recently ramped up capacities for the drug. Upadhye said that demand for tocilizumab is slightly muted now, while demand for remdesivir and favipiravir continue to grow.

A senior official at a Hyderabad-based firm said that sales have picked up as the country is opening up. “Sales in the second half would be better than the first half provided there is no second wave of the pandemic,” he added. 

Firms that largely depended on their field force and the doctor connect to sell medicines are also learning the ropes with digital marketing and branding techniques. Not only have pharma firms launched brands through digital webinars, but some have also warmed up to targeted digital marketing techniques.

The marketing and new initiatives head of a Mumbai-based firm said that during the last few months companies have leveraged digital marketing tools that can target a group of doctors (say, dermatologists) in a specific location (for instance, Bhubaneswar). Many key opinion leaders have emerged across centres where drug firms have held webinars with physicians to remain relevant, he added, requesting anonymity.

However, with the unlock in motion, drug firms are back to relying on their field forces to drive sales and that has helped with the revival. “Some segments that did well last month include gastrointestinal and dermatology. While gastro sales growth catapulted from 5.4 per cent in September to 13.6 per cent in October, derma sales growth picked up from 3.1 per cent in September to 10 per cent in October. Chronic therapies continue their good run,” said Krishnanath Munde, analyst with India Ratings Research.