The Indian pharmaceuticals sector experienced a good third quarter due to growth in the domestic market and a favourable pricing landscape in the US. Companies also reported minimal impact from the Red Sea crisis.
Growth in the Indian pharmaceuticals market surpassed estimates for many, driven by higher volumes from an expanded field force. Analysts at YES Securities highlighted margin improvement facilitated by softening input costs and reduced freight expenses.
Analysts at Nuvama observed a benign generic price erosion in the US, attributed to ongoing shortages and longer approval timelines. This trend benefited generic companies, as seen in their improved gross margin performance. They also noted that as abbreviated new drug application (ANDA) approvals outpaced ANDA submissions in 2023, R&D investments in non-complex products slowed substantially, supporting a better price environment for Indian generic pharma manufacturers.
Sun Pharmaceutical Industries Ltd. reported revenue growth supported by the specialty business, new US generic launches and steady growth in India. Global specialty sales accounted for 19.2 percent of Q3FY24 sales, and doubled its contribution from 7 percent in FY18 to over 16 percent in FY23. HDFC Securities analysts anticipate this growth momentum to persist in the coming quarters.
Dr Reddy's Laboratories exhibited strong sequential performance over the past four quarters, driven by the generic version of US pharmaceutical company Celgene's cancer drug Revlimid, with expectations of continuity for the next four to five quarters, according to HDFC Securities analysts.
Cipla introduced the off-patent variant of AstraZeneca's inhaler Symbicort and one peptide product in the quarter, with plans for four more peptides in FY25. Despite witnessing an on-year revenue increase of 13.66 percent and a profit rise of 31.83 percent, there was a marginal decline in revenue (1.11 percent) and profit (6.63 percent) compared to the previous quarter.
Lupin's US business recorded a revenue of $212 million in the three months to December 2023, representing a 0.5 percent increase on a quarterly basis. New launches such as antiretroviral therapy drug darunavir and respiratory product gSpiriva continue to gain traction, with the company achieving market shares of up to 30 percent and 32 percent, respectively, despite experiencing low single-digit price erosion in its base business. Recent approvals of 180 days' exclusivity for tolvaptan (used for treating low sodium in the blood, among other things, and which has a market size of $287 million) and the US' FMC Corporation's fungicide Xyway (market size $958 million) could add business in the second half.
Aurobindo Pharma reported a 90.6 percent year-on-year rise in consolidated net profit to Rs 936.2 crore for the October-December quarter. Its margins were supported by steady US growth, normalisation in input cost, improved gross margin and overall cost controls, according to analysts from HDFC Securities.
Mankind Pharma’s consolidated net profit increased 55 percent to Rs 460 crore in the third quarter. Nirmal Bang analysts predict future growth strategy for the company to revolve around an increased presence in the chronic diseases segment, improved scale in consumer healthcare, deeper penetration in metro and Class I cities and increasing doctor engagements, especially with specialists.
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