Price is the key growth driver of Indian pharma market, shows AWACS data

Market set to grow by 2.5-5% in calendar 2022. could even hit 5% due to a strong seasonal sales such as anti-infectives, and impact of NLEM drugs price hike

Price growth is the major growth driver of the Indian pharma market, shows data from market research firm AWACS.

With a 10 per cent hike allowed for scheduled drugs (under price control) according to the wholesale price inflation this year, price hikes are likely to continue over the next 12-months gradually, and thus AWACS expects the Indian Pharma Market (IPM) to clock a 2.5 per cent growth in calendar 2022.

With a strong seasonal sales of anti-infectives and some other categories, impact of the NLEM (National List of Essential Medicines) drugs price hike may take the market growth to 5 per cent as well, feels AWACS.

A look at the data for the month of May shows that price growth has been about 5 per cent while volume growth is a negative 6.6 percent. The growth of new products is also a negative 1.7 per cent. For the past 12 months or if Moving Annual Turnover (MAT) data is considered, the price growth is 5.4 per cent as compared to one per cent new products growth and negative 0.1 per cent volume growth. Therefore, the volume sales have declined, but pricing growth has pushed the overall IPM growth.

Sheetal Sapale, president, AWACS, said that for the month of May the market has shown value degrowth of minus 3.3 per cent while the unit sales growth rate is a negative 10.4 per cent. This means a certain component of price growth has supported the market.

She says dermatology, neurology and the gyaneocological portfolio have managed to grow in these circumstances – both by value and unit sales in May. Collectively these three therapies contribute to 18-20 per cent of the market. Anti-infectives, vitamins, respiratory drugs and even hormones have posted double-digit de-growth by both volume and value. Sapale says it is not surprising as the base of May 2021 is very high for these therapies when India was battling a Delta variant led Covid19 wave.

She says when one looks at MAT data, price growth has driven the growth in some key therapy areas. “We have taken six top therapy areas which contribute to 60 percent of the IPM and seen how price growth is impact these areas. These are cardiac, anti-infectives, gastroenterology, anti-diabetic, vitamins and respiratory,” she adds. Cardiac therapy has seen a 5.4 percent MAT May 2022 price growth, while anti-infectives have clocked 3.5 percent MAT May 2022 price growth. For gastroenterology this is even higher at 7.2 percent, while for anti-diabetic it is 4.6 percent. Respiratory has seen 7.3 percent price growth rate, while vitamins category has had a 5.3 percent growth according to MAT May 2022.

In calendar 2021, the IPM had reached a size of Rs 1.67 trillion, which is an increment of almost Rs 22,000 crore over the previous year. Sapale says that last year’s value growth is driven by the peak Covid19 months of April-June, and is not expected this year.

For the 2022 calendar year, the market is expected to touch Rs 1.71 trillion, according to AWACS analysis and the projected growth rate could be around 2.5 percent. “This is, however, a mathematical projection and one needs to consider some other factors. For example, the NLEM is a significant chunk of the IPM, and some of the categories in this will have around 10 percent price hikes. Add to this, if there is a strong seasonal sales (monsoons and winters) when respiratory, anti-infective, pain and analgesics, gastroenterology may see a strong uptick,” she says. Thus, the growth of the IPM could touch 5-7 percent by the end of the year.

“We need to wait and see how the IPM growth trends behave over the next two to three months before we can conclude how the IPM growth would end this year,” she said.