Drug sales in India grew nearly 18% in March 2009 due to increasing penetration of health insurance, favorable regulatory environment and government support.
Drug retail sales in India recorded the highest monthly growth in March 2009 since February 2008 as major drug companies rushed to clear their stocks towards the end of the fiscal year, as reported by ECONOMICTIMES.
According to a research company ORG IMS, in March 2009, drug sales grew 18.4% as compared to 14.7% growth observed in March 2008. It was the highest monthly growth in past 14 months when the sales registered 19.8% YOY growth. Earlier, in October 2008, the Indian drug market worth Rs 35,000 Crore tumbled down by 1.2%, the first time in several years. However, thereafter, the retail sales of drugs have grown steadily and in February, it surged 13.3%.
Increasing penetration of health insurance, favorable regulations and government assistance like allocating higher budget for health, launching of projects like National Rural Health Mission (NHRM), and the country’s emergence as a medical hub are the factors backing the growth in domestic drug sales.
Notwithstanding currency fluctuation and forex losses that have impacted the profit margins, the revenues of Indian drug giants like Cipla, Dr. Reddy’s Laboratories, Wockhardt and Sun Pharma are expected to surpass their growth targets set for 2008-09.
The growth observed in drug sales was mainly credited to the aggressive campaigning by the pharmaceutical companies to meet the annual targets and clearing off stocks before starting of new fiscal year. Besides, the growth accelerated by consumers shift to relatively inexpensive brands in wake of economic crisis. This surprised industry experts as demand for drugs is based on requirement. Moreover, drugs are regarded resistant to economic turmoil, which has affected most of the global industries.
Moreover, due to shift in lifestyles, chronic therapy segments, like central nervous system (CNS), anti-diabetic, gastrointestinal drugs and cardio vascular system (CVS), will drive the domestic drug demand in future.
According to a Research Analyst at RNCOS, “The top line growth in the Indian drug companies will continue to benefit on account of 25% depreciation in Rupee since Q4 2008. However, most of the companies are expected to see their margins shrinking. The growth of this sector will outperform the industry average in the coming years, particularly during the second half of 2009. Besides, debt and losses due to fluctuation in currency are just momentary.”
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