Besides analysing the past, we need to plan for the future
A recent CARE Ratings’ report analyses the ‘twin shocks’ of lower than expected Index of Industrial Production (IIP) in October and higher than expected Consumer Price Indices (CPI) in November. The good news is that the pharmaceutical sector has seen an expected uptick in production in October, thanks to post GST restocking. The segment grew by 23 per cent during the month, lower than the 26.4 per cent growth in the previous month, but 4 per cent higher than the growth witnessed in October 2016, which is an encouraging sign.
This is also borne out by the latest AIOCD PharmaTrac update, which puts pharma sales in November at 8.1 per cent, a 1.5 per cent growth over October. Volume growth also improved to 6.5 per cent vis-à-vis 5.6 per cent in the previous month. Growth is thus inching up and we hope the December sales figures continue to show a steady uptick.
The last issue of the year also marks our 23rd Anniversary and we once again thank our readers for their support over the years. 2017 has been a tough year for the pharma sector, due to global moves in key markets like pressure from regulators and increasing channel consolidation.
In 2018, we will need to closely track the US Department of Justice’s litigation on price fixing of generics which has named five pharma companies from India (Sun Pharma, Aurobindo, Zydus, DRL and Glenmark). Given that some of the charged parties have accepted the allegations and are now assisting the DoJ, it is probably only a matter of time before the 18 companies will be charged penalties. Even though they deny the allegations, there is past precedent that faced with such penalties, companies have preferred an out-of-court settlement. Either way, this development is a sign that the entire sector, not just these 18 companies, is in the cross hairs of the US government and other geographies could follow suit. On the domestic front, the expanding span of price control and GST left their own scars in 2017.
But besides analysing the past, we need to plan for the future. Thus, our theme for this year’s anniversary issue is, how can India Pharma Inc find its lost mojo? While there is no one prescription for success as each company has to find its own sweet spot, a combination of some of the insights in this issue might just be the right formula for success. Hopefully, 2018 will finally mark a turning point for the sector.
The silver lining is that India’s fundamentals remain strong. In a recent issue of Horizons, (issue 4, 2017), a BDO analysis of the global M&A market, gives a thumbs up to India. The India report highlights that the country’s positive economic outlook looks set to boost M&A activity. India’s Pharma, Medical & Biotech (PMB) sector had 36 deals, making up 9 per cent of the country’s total M&A activities. At sixth place among the nine sectors being tracked, there is obviously potential for more M&A in the PMB sector. Will this pan out in 2018? Our first issue of the new year will have industry gurus gaze into their crystal balls and predict the trends to watch out for in 2018. Do write in with yours as well.
Viveka Roychowdhury, Editor