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May. 03 2013
Stay The Course-Slow Growths just an abberation
 

Dear All,

 

At PharmaTrac, we have been doing an intense analysis of what caused the slowdown for last two quarters.

 

·         Its not NLEM, that’s yet to have impact and Ceiling Prices are yet to be declared

·         Its not down-stocking by Distributors in fear of the impending NLEM – The Inventory Days are fairly stable and have in fact gone up a shade.

·         Its not a sudden slow down or drop in Chronic Therapy Patients or Anti-Infectives Season

·         Its not Generics that are suddenly gaining share (they are slowly & gradually gaining share

·         Its not the Government free medicine scheme that is suddenly spelling the death knell (Markets like Rajasthan continue to grow in PharmaTrac)

 

So what then has caused 7.8% growth for the Mar 13 quarter – Its just the “Base Effect” or rather the High Base Effect.

 

Indian Pharma Industry has over the last decade grown around 13%. Within this benchmark of growth – there have been periods of faster growth & slower growth. The key challenge of seeing growth rates is – we compare just the corresponding period of last year and sometimes get carried away too much, but do not see the corresponding period over years previous to last year. So last four quarters the growth rate has dipped from 17% to 13.8% to 9.4% to 7.8% and apparently it seems a big free fall across therapies.

 

 

However to understand this free-fall, one has to study a 2 year growth rate trend by quarter and we observe that exactly corresponding previous quarters were a huge aberration in terms of high growth rates – and we were sitting on a very high base for a year, as compared to long term growth rate of 13%. So a balancing act, at a market level, was imminent.

 

 

To further understand and re-confirm that the current year absolute value is in tune with long term behavior of Indian Pharma Market (13% Growth) – we completely ignored last year base and did a 2 year CAGR comparison – saw Oct-Dec 2010 and Jan-Mar 2011 and compared it with Oct-Dec 2012 and Jan-Mar 2013. We found the values of last two quarters precisely in line with the long-term growth achievement.

 

 

Thus there is no problem of “topline values” for the last two quarters – but just the fact that 3 quarters of last year, were so excellent, that suddenly for a year – we are seeing an apparent slowdown or concluding on a pseudo slowdown.

 

Based on these trends, we expect Apr-Jun to remain sluggish at 10% growth (as Apr-Jun 2012 was 17% growth) and after that the remaining 3 quarters of current financial year to come back near the long term average of 13%. Based on 2 year CAGR trend, we do not interpret the current weak quarters as a sign of slowdown and would suggest all stakeholders to stay the course. India Pharma Market has for past several years grown at 13% and will continue at that rate in the foreseeable future.

eXpert Solution by
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