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Having covid-19 drugs in the portfolio is proving useful for some drugmakers. With the Indian pharma market once again showing signs of slowing sales, drugs such as Favipiravir, Remdesivir and Toclizumab helped Glenmark Pharma Ltd, Cipla Ltd and Cadila Healthcare Ltd, with November sales rising 7-15% from a year ago.

Overall sales growth, however, decelerated considerably in November, which is a surprise given that it had bounced back in October. Sales growth decelerated to about 1.3% year-on-year in November as against 9.8% in October. Note that growth in September stood at 4.7%, suggesting that the recovery has been short-lived.

One of the main reasons has been slower volume growth, which is showing signs of tapering off after monsoons. Volumes declined by 6.9% y-o-y in November as against a 0.6% growth in October. In the past eight months, volumes declined 7.6% on an average.

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Some of this could be attributed to the slower patient inflows at clinics, say analysts. In fact, almost all therapies including derma, pain, gynaecological and neuro have shown a dip in sales growth.

Sales of covid-19 drugs are also seen moderating due to the lower number of cases in November. “Excluding the contribution from covid-19 drugs, growth for Glenmark, Cipla and Cadila were at -0.4%, 3.9% and -1.1% respectively," said analysts at Nomura Financial Advisory and Securities (India) in a note.

Another reason for the decline is the lower sales of acute therapy drugs due to better hygiene. Within acute therapies, anti-infective growth fell to 0.2% in November against 6.6% in October. In addition, there was some stocking at user ends in October too, which led to a lower take-off in November, note analysts.

However, chronic therapies such as cardiac have shown a growth of 8.7% in November, while anti-diabetic registered a modest growth of 1.9% in November.

For now, pharma companies may not see growth normalize in the next few months. This could impact their revenue growth in the second half. But profits could still increase.

“While top-line growth for the Indian formulation business may disappoint, profitability may remain high due to lower costs—particularly for travel, sales and marketing expenses. It is likely that cost savings of 1-1.5% are sustained beyond the pandemic," said analysts at Nomura in the note.

While this should continue to support the sector, note that the valuations of the Nifty Pharma index have been expanding due to the sharp increase in stock prices. The index’s one-year forward price-earnings multiple is at 27 times as against 19 times a year ago, as per data from Bloomberg.

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