All Indian Origin Chemists & Distributors has reported that secondary sales (sales from stockists to retailers) of drugs have come down to -1.7% year-on-year for October after a fall of 1.8% in September 2013.
All Indian Origin Chemists & Distributors Limited (AIOCD) has released domestic market data for the month of October 2013. The secondary sales (sales from stockists to retailers) growth for the India Pharma Market (IPM) has come down to -1.7% year-on-year for the month after recording a sales decline of 1.8% in September 2013.
According to a Quick Note from Nomura Equity Research on the pharmaceutical market in India, the slower sales growth is caused by disruptions in the marketplace as the new pricing policy is being implemented,. The impasse between the trade and the companies regarding margins for the drugs under NLEM (National list of essential medicines) is not yet fully resolved.
As expected, products under price control recorded a sharper decline of 17.9% year-on-year, whereas the rest of the market recorded modest growth of 0.9% year-on-year. In terms of company-specific growth, Glenmark, Sun Pharma and IPCA, with gross sales growth of 17.5%, 15.1% and 15.1% respectively, grew substantially ahead of the broader market, says Nomura.
In contrast, according to Nomura, Glaxo and Ranbaxy recorded growth of -35.5% and -14.5%, respectively. For the IPM, volume growth continues to be low at -6.3%.
Given the disruptions in the marketplace, Nomura expected significant divergence between primary sales (sales from company to stockists), secondary sales (sales from stockists to retailer) and end-market sales. Nomura expected primary sales to be lower than secondary sales. AIOCD reports sales drop of 1.8% for September 2013.
However, the primary sales growth reported by most Pharma companies in 2QFY14 (except for IPCA, Zydus Cadila) has been better than the secondary sales growth reported by AIOCD AWACS.
Nomura shows how the volume growth in the pharma market is weak in the following chart:
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