Analysis of 13 well-known Pharma stocks to determine impact of #Covid19

Pharma

IPM growth not yet impacted by Covid-19

Quick Pointers:

 IPM growth recovered to 12.1 % YoY as against its single digit growth in Feb -19(9.9%) and Jan-20(7.7%). However, MAT grew at 9.7% in Feb-20.

 MAT growth of Cardiac (CVS), Diabetology and Respiratory was 11% ,11%, and 11.5% in Feb-20.

IPM’s MAT growth in Feb-20 was 9.7% as against 9.6% in Feb-19 and Jan-20. The growth was majorly contributed by price at 5.4%, volume at 1.9% and new product at 2.5%. In the last 12 months, contributors average growth towards price, volume and new products were 5.6%, 1.7% and 2.3% respectively. The growth attributed by new products and volume however has been on a declining trend in last 50 months, while price hike has been a key factor that has contributed to IPM’s growth.

With 70-75% intermediaries/API/KSM sourced from China, IPM hasn’t been impacted by Covid-19 (Coronavirus). However, governments pre-emptive step of export ban on 26 API/formulations indicate inventory levels might have started shrinking. Our channel check suggests, prices of few APIs have raised since past few weeks as production/shipment in China are yet to normalize.

The availability of antibiotics, vitamins, hormones and fermentation based medicines (cephs, pen-G, vancomycin) will most likely to be impacted in later part of 1QFY21E in India, if the epidemic in China continues for another 3-4 weeks. This may increase prices of Non-DPCO (Drug Price Control Order) drugs, while availability/ volumes of both DPCO and non-DPCO drugs is likely to decline.

Key Highlights:

 Amongst PL coverage universe Lupin (11.8%), Dr.Reddy’s (18.9%), IPCA (9.8%), Eris Life (11.4%),Glenmark (10.5%), Cadila (12%) and Indoco Remedies (11.6.%) grew at a higher rate than IPM in Feb-20 (MAT). Cipla and Sun Pharma were only two companies which grew at a lower rate than IPM at 7.9% and 9.3%.

 Market share for products under NLEM and Non-NLEM was 16% and 84% with the growth of 9.1% and 9.8% respectively in Feb-20 (MAT).

 Indian companies maintained a market share of 80% with 10% growth vs. MNC’s share of 20% with 8.3% growth (vs. 8.6% in Jan-20) on MAT.

 Acute/Chronic/ Sub-Chronic/ accounted 47%/ 33%/ 20% share of the IPM with growth of 9.6%/10.5%/ 8.6% for Feb-20, respectively. GSK grew highest in Acute segment at 16.1%, Alkem continued to grow at 24% for the third consecutive month in Chronic, while Torrent growth was highest in Sub-Chronic segment with 12.7% in Feb-20 (MAT).

 There were 282 new brands launched in Feb-20 vs. 207 brands in Jan-20.