Domestic pharma gets extended release from low growth
Domestic pharmaceutical companies are in better health. In November 2017, India’s medicine sales rose by 8.1% over a year ago, despite a high base effect caused due to demonetisation, according to market research firm AIOCD Awacs.
In November 2016, medicine sales jumped by 14.5%, partly because people were allowed to use old notes to buy medicines at pharmacies.
If medicine sales remain at current levels, it can support higher growth for a few more quarters (see chart). Sales have recovered from a decline of 2.3% seen in July, the month when the goods and services tax was rolled out. After that, it has recovered gradually. Growth has been volume-led, with November reporting a 6.5% growth in volumes while new products contributed 3%. Overall, prices declined by 1.5%.
While these are retail growth rates and may not correspond directly to what pharmaceutical companies report in their financials—primary sales to the trade channel—the uptrend should reflect, to an extent, in their numbers as well.