Sanofi to boost volumes, exports as price control hits margins

Mumbai : With price controls continuing to crimp margins, Sanofi India expects a muted growth in the domestic market in 2017 and therefore will be focusing on volumes as well as exports.

"We expect to continue to face annualised negative impact of price cuts imposed in 2016. Due to this reason, growth of domestic business will be muted in value terms in 2017. Therefore our focus will be to drive the volume growth as well as exports, which is likely to grow steadily," Sanofi India said in its annual report for 2016.

Managing Director Shailesh Ayyangar said the focus will be to increase the domestic volume growth on one side and drive exports on the other, as the latter looks more promising.

To shore up exports, he said Sanofi is in the process of unveiling a strategic project to boost its competitiveness and productivity through operational improvements as part of a specially designed programme named 'Fit for Future' at both its manufacturing sites.

It can be noted that the number of medicines falling under market-based price controls has gone up to nearly 650 formulations after the March 2016 list, which constitutes nearly 20 per cent of the total market.

Last year, the government amended the Drug Price Control Order (DPCO) following which the National Pharmaceutical Pricing Authority (NPPA) fixed the ceiling prices of medicines and pharma companies reduced the prices of those medicines in compliance with the new norms. This has affected the profitability of the sector.

The domestic pharma industry grew at 11 per cent in 2016. The demand for pharma products has been buoyant owing to the growing disease burden and affordable prices of a large number of essential drugs.

Ayyangar said its drugs in the price control include Amaryl, Brodactum, Cardace, Cetapin, Frisium and Taxotere in addition to Arava, Avil, Clexane, Lasix and Insuman.