Pharma index in focus, up 3.45% YTD: Indian Pharma Market growth catches pace in December

The Nifty Pharma Index remains in Focus and is up about 3.45% in January, outperforming the benchmark Nifty 50 index that is down around half a per cent. While the Pharma sector remains a defensive sector and investors resort more to investments in times of volatility, however the gains in the Nifty Pharma index are also being led by robust growth in the pharma market.

Indian Pharma market growth after remaining tepid in the month of November 2023 however rebounded, catching pace in the month of December 2023. The growth rate in November had remained tepid thanks to the high base of last year and also the start of a festive season. The growth picking up pace in December thereby adds to confidence.

The domestic pharma market has grown at a better pace of 9.2% year on year in December 2023, after a poor show of just 2.9% year on year growth in November 2023, said analysts at Elara Securities India private Ltd referring to data by Pharmatrac, a pharmaceuticals market research company. The Chronic segment of drugs continue to drive the growth in the Indian pharma market.

The acute segment of drugs had seen tepid growth in November too, which is attributed to the seasonal factors. In December 2023, the pick up was led by Cardiac portfolio of drugs that saw a growth of 11.5% YoY. The Anti infectives were up 10.3% Yoy,, Gastro intestinal were up 10.0% YoY, Pain segment was up 10.2% YoY and Neurology was up 12.0% YoY).

Anti diabetics too saw decent growth of 8.9% YoY suggested data. Oncology continued with its strong performance, up 13.7% YoY, but is a smaller part of the overall pie, said analysts at Elara. While currently the price hikes are driving growth, the volume growth over time is likely to catch pace, feel analysts.

The volume growth picking up and price hike moderation will mean overall growth rate may not improve much. Nevertheless, a double digit growth rate remains a healthy growth rate for the pharma market. Elara analysts expect marginal improvement in growth rate in CY24(FY25) and say that volume growth will likely pick up while price increase will likely moderate.

They continue to believe that the organic growth expectations built into the pharma stocks (which as per them is in 11 14% range) will disappoint. This could be a risk, specifically for companies with a high domestic business contribution to overall profits, as per them. In the meanwhile, during December as per Elara, as per data, Sun Pharmaceutical , , Torrent, Alkem and Glenmark grew in mid high, single digit percentage.

Mankind Pharma, Zydus Lifesciences and grew in 10 15% range. Abbott, Ipca, Dr Reddy’s and Sanofi grew slightly lower than 10%. Analysts however say that AWACS data does not usually correlate with companies’ reported numbers and should not be extrapolated to reported growth. Livemint tops charts as the fastest growing news website in the world to know more.

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