Sales of Indian pharma companies to rise: Fitch Ratings

Fitch Ratings, in its recently released report, said that the sales of Indian pharmaceutical companies will rise after a gradual easing of the Coronavirus pandemic-related lockdown measures that caused disruptions across most markets in the first quarter of FY21.

The global rating agency said that this will underpin profitability in the quarter ending September even after normalisation in costs, following cuts in Q1FY21, helped to support profitability despite the Coronavirus impact.

According to the report, travel restrictions to contain the spread of the pandemic reduced the number of doctor visits and hospitals as they prioritised COVID-19 treatment over other elective procedures. It noted that these affected prescriptions and drug sales volume, particularly those, which are used to treat acute medical conditions. A drop in the monthly volume was witnessed, varying from high single digits to mid-double digits across the markets. Nonetheless, it added that the resilient sales in chronic segments and active pharma ingredients (API) for companies with in-house manufacturing has limited the overall impact.

The rating agency further added that some of the indirect costs like travel and marketing costs that were low due to the lockdown measures are likely to return to normal in line with the gradual easing of restrictions since May. Besides, it also said that the gradual easing has led to a rise in doctor visits and elective procedures since May in key markets. Fitch Ratings is of the view that this will benefit sales, particularly in acute therapy areas, and support profitability in the second quarter, notwithstanding the uncertainty over the duration and impact of the pandemic for the rest of FY21.