Pharma in Q3: India growth to recover, US to remain stable led by new launches

NEW DELHI:  The pharmaceutical industry, the latest breeding ground of India’s billionaire promoters thanks to Covid-induced growth, is likely to report moderate growth during the quarter ended December 2020. Analysts say easing of lockdown to support some recovery in acute portfolio and injectable products in India, while the US revenues may see marginal growth sequentially led by new launches and specialty portfolio.

“We estimate India business to grow in high single digitas seen in secondary sales data. We forecast the EBITDA margin of covered companies at 22 per cent (+130bps YoY) led by revenue growth and cost control measures,” analysts at ICICI Securities wrote in a note. The Indian pharma market witnessed a growth of 6.4 per cent in value terms  for Q3FY21, showed data from market research firm AIOCD-AWACS. Volumes declined 1.9 per cent,  while  prices and new introductions grew 4.9 per cent and 3.4 per cent, respectively. 

Companies such as Aurobindo  (with new product approvals and stable pricing), Dr Reddy’s & Biocon (with new product launches in the US), Sun & Alembic (with traction in existing and specialty products) and Divis lab (led by strong demand for APIs from India), are expected to perform relatively better, they added. Dr Reddy’s and Glenmark are estimated have largely flattish sales.

Other key trend to watch out for is the weak start to flu season that could impact sales of Natco Pharma, Ajanta Pharman and Cadila Healthcare, said analysts at Edelweiss. In healthcare, revenue is expected to improve 10 per cent sequentially driven by improvement in occupancy levels.