The Rs 1.3-lakh-crore Indian pharmaceutical market is likely to see a lower growth in sales, analysts fear.

Factors such as higher purchase of “trade generics”, or generic drugs pushed by chemists, and weak summer and monsoon seasons affecting the sales of acute and chronic therapy drugs amid the government’s focus on the Jan Aushadhi scheme have led to a slowdown in the domestic market.

According to a report by Edelweiss Securities, growth has decelerated to 10 per cent from 13.5 per cent over the past three years.

“The street is building in 13-15 per cent domestic sales growth. Our analysis indicates that beating a 10 per cent growth will be a challenge and consensus is likely to take 2-3 per cent cut in sales, which implies 3-5 per cent earnings impact. Companies having large domestic exposure are Alkem, Torrent, Cipla and Glenmark. Also, expensive valuations for domestic-focused companies, which trade at significant premium, are likely to soften,” the brokerage said in a report.

One of the key elements contributing to the tapering of growth is the rise in trade generics, which has adversely impacted branded generics where the margins are higher for domestic companies.

Apart from growing awareness about cheaper alternatives to generics, an increasing number of channels providing access to these drugs have hurt the volumes growth of branded generics.

The Centre’s push towards Jan Aushadi stores has also played its part. With the objective of making quality generic drugs available at affordable prices, the Jan Aushadhi Scheme was launched by the ministry of chemicals & fertilisers in November 2008.

The scheme was later renamed Pradhan Mantri Bhartiya Janaushadhi Pariyojana. Implemented through the Bureau of Pharma PSUs of India, under the ministry of chemicals & fertilisers, the medicines are made available through exclusive outlets, called Pradhan Mantri Bhartiya Janaushadhi Kendras.

The first store was launched in Amritsar in 2008. There are more than 4,800 such stores as of January 31, 2019. The stores offer more than 800 drugs covering major therapeutic groups such as anti-diabetic, cardio-vascular, respiratory and the central nervous system. It is expected that the number of these stores will go up further over the next couple of years.

Though these stores have brought good news in terms of the availability of drugs at affordable prices (50-90 per cent discount compared with their branded peers), the growth of branded generics has taken a hit.

“The biggest impact has been the push to Jan Aushadhi. The scheme is expected to top revenue of Rs 300 crore this fiscal and could disrupt one per cent of the Indian pharmaceutical market. We estimate the current impact on market growth at around 120 basis points,” the brokerage said.

The Jan Aushadhi scheme has the potential to disrupt around 20 per cent of IPM sales’’, the brokerage added.