Strong chronic segment sales power growth in Indian pharma market
The Indian pharma market has grown at an 8% compounded annual growth rate (CAGR) during the calendar year 2013-2017, helped by impressive growth in chronic segment sales. The pharma sales stood at USD 17.87 billion for the moving annual total (MAT) ended December 2017, up from USD 13.35 billion in CY13 (Image 1). On a year-on-year basis, the pharma market witnessed an 8.83% increase in sales for twelve months ended December 2017.
[Image 1: The Indian pharma market sales – moving annual total]
The chronic segment (a disease that persists over a long period of time such as diabetes, high blood pressure, Alzheimer etc.), which accounts for 32% of total Indian pharma market, staged a stellar performance during the CY13-17 period. Changes in lifestyle and food habits coupled with higher disposable income fueled growth in chronic diseases in recent years.
Over the past 4-years, the chronic segment grew at a CAGR of ~10% to USD 5.72 billion at the end of CY17 on MAT basis. At the same time, the sub-chronic diseases segment, which accounts for 21% of the Indian pharma market, grew at an 8.50% CAGR over the last 4-years to USD 3.66 billion in CY17.
On the other hand, acute segment (a disease that lasts a short time such as flu, common cold, pneumonia, heart attack etc.), which accounts for 47% of the Indian pharma market, logged on to a growth lower than the industry growth at ~7.5% CAGR to USD 8.47 billion at the end of CY17 on MAT basis.
[Image 2: Segment-wise sales – moving annual total]
The higher growth in chronic segment augurs well for the Indian pharma market as the demand for these drugs is more or less ensured. Moreover, the margins enjoyed by chronic segment are higher as compared to the acute segment. In our view, the companies with higher concentration to the chronic segment are poised to perform well in the future.
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