From DRL to Glenmark, pharma companies see steady revenue growth in Russia

Strong sales in Q4 during war aided by 'stocking up of inventory'

The Russia-Ukraine war has not dampened Indian pharma sales in that market. In fact, firms with a presence in Russia — Sun Pharmaceuticals, Dr Reddy’s Laboratories (DRL), and Glenmark — have posted high double-digit revenue growth during the ongoing crisis.

DRL, for example, posted revenues of Rs 686 crore for Q4, a year-on-year growth of 70 per cent. “Growth majorly attributable to traction in base business and new product launches. Q4 partially benefited due to stocking up and divestment of two non-core brands,” DRL said.

India’s largest drug maker by market share Sun Pharmaceutical Industries has posted a 43 per cent YoY growth in constant currency terms during the fourth quarter of the 2021-22 fiscal year. Sun Pharma’s MD Dilip Shanghvi said there had been no major impact of the geopolitical tension on Russia business. The company hardly has any business in Ukraine, he clarified.

On the other hand, another Mumbai-based firm Glenmark saw its secondary sales grow by 31 per cent YoY in Q4. It registered a growth of 27.6 per cent versus a market growth of 21.6 per cent in Russia, noted an Elara Securities report.

During the quarter, Glenmark received approval for Ambroxol Solution (a respiratory drug) and it said the response to Ryaltris and Ryaltris Mono (nasal spray) has been “very encouraging” in the Russian market.

The strong growth in the fourth quarter, which also coincided with the geopolitical tension between Russia and Ukraine, is attributable to stocking up of inventory.
 

Speaking to the media after the quarterly results, GV Prasad, co-chairman and MD of DRL, said, “Our Russian operations continue as usual. There was some stocking up of inventory by our customers during the initial period of this ongoing crisis. From the next quarter we expect that to normalise.” He added that they will continue to launch brands in the Russian market.

CEO of branded markets (India and emerging markets), DRL, MV Ramana said DRL had a significant volume market share in Russia. It has seen good growth in that market, and continues to focus on accessibility and affordability. “We have been there for three decades now. We continue to run our operations as usual. We have taken care of the safety of our employees,” he added.

Ramana further said there had been no issue with repatriation of funds from Russia so far. No pharma company has, in fact, exited Russia, he added. “Some multinational companies have halted their promotional activities, but no one has exited the country,” Ramana told reporters.

Prasad said operations in Ukraine were impacted initially, but now they are trying to find logistical solutions to send medicines.

Emerging markets contribute 21 per cent to DRL’s consolidated revenues. It is more than the share of India (20 per cent). DRL has launched 86 products across emerging markets during the year.

Emerging markets contribute about 17 per cent to Sun Pharma’s consolidated global turnover.

Russia is one of the key markets for pharma exports from India, ranking fourth in FY21 after the US, South Africa and the UK. Russia accounted for 2.41 per cent of India's pharmaceutical exports in FY21, according to data from the Pharmexcil.

The US, in comparison, accounted for 31.57 per cent of India’s pharma exports in FY21. Indian firms exported $590.80 million worth drugs to Russia in 2020-21.

Drug firms such as Sun Pharmaceutical Industries, Dr Reddy's Laboratories have significant presence in Russian. In its FY21 annual report, DRL said revenue from Russia was Rs 1,580 crore.