The BSE Health Care Index is down around 5% since the start of the September quarter, which is one indication that the problems plaguing the pharmaceutical sector are not behind it yet.

Investors did not get any firm signals from the September quarter’s results that better days are ahead.

The only common positive factor reported by the companies was pertaining to the domestic market.

Sales growth recovered as normalcy returned after the dip in sales due to the goods and services tax (GST) roll-out in the June quarter.

Distributors began restocking and inventory levels moved up.

Sun Pharmaceutical Industries Ltd, for example, saw its India sales increase by 11% from a year ago, compared with a 5% decline in the preceding quarter.

News on the US market front was not good, however. The problems of the previous quarter carried over, with issues such as price erosion, competition and delays in getting approvals affecting sales growth.

In Sun Pharma’s case, sales declined by 12% on a sequential basis, while Lupin Laboratories Ltd saw sales decline by 15% and Dr Reddy’s Laboratories Ltd faced a decline of 4.2%.

Companies tried to limit the impact on profitability by cutting costs on fronts such as research and development, employee costs and other expenses. That did help in some cases; but on a sequential basis, profit growth was under pressure during the quarter.

What is not clear is if the worst is over in the US market or whether the base business (excluding income from new launches) will continue to decline.

Large companies such as Sun Pharma, Lupin and Dr Reddy’s continue to have pending regulatory issues, which are not showing signs of getting resolved soon.

That makes it even more difficult to predict a recovery in sales growth in the near to medium term.