Alkem Labs sees huge sales momentum of anti-infectives in Q1FY22

Secondary infections due to bacteria and fungus have gained traction pushing up sales; healthy momentum in chronic therapies and increased usage of vitamins, nutrients and minerals act as growth triggers

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Drugmaker Alkem Laboratories said it expects its domestic formulation segment to do well in Q1FY22 led by growth momentum in the acute component,  more specifically its anti-infective division.

The company says it is seeing a huge demand for anti-infectives like antibiotics in the COVID-19 second wave.

“In 2020 COVID-19, the secondary infection of pneumonia wasn’t there, which is extremely high this year, the main reason why antibiotics have shown very good revival; and of course allied therapies like acidity management, Vitamin-C and zinc preparations have shown good growth,” said Sandeep Singh, Managing Director of Alkem Laboratories at the compamy’s earnings call on May 25.

“Q1FY22 should do much better than Q1FY21 of last year,” he predicted.

Alkem said it expects its India business to grow at `mid-teen’ levels in FY22.

The company derives 80 percent of its revenues from the domestic formulation business through the acute segment, of which anti-infectives alone contribute about 40 percent.

In the first wave, sales of antibiotics had collapsed due to lockdowns and COVID-19 appropriate behaviour, which reduced the infections.

But in the COVID-19 second wave, secondary infections due to bacteria and fungus have gained traction. Doctors are using antibiotics much more aggressively in COVID-19 patients to keep these infections, especially pneumonia, at bay.

Alkem earned Rs 8,865 crore as revenues from operations in FY21, registering a year-on-year (YoY) growth of 6.2 percent. Its India sales stood at Rs 5,699.6 crore, which accounts for 64 percent of total revenues. The sales grew YoY at 4.5 percent.

International sales, which account for the rest, were pegged at Rs 3,028.8 crore. It rose 10.6 percent YoY.

Alkem expects the anti-infective segment to do well in FY22, compared to the low base of last year.

Noted Motilal Oswal in its latest report: “Healthy momentum in chronic therapies and increased usage of vitamins/minerals/nutrients and pain products should enable ALKEM to deliver 13.5 percent sales CAGR (Compound Annual Growth Rate) over FY21-23E.”

“It plans to launch more products in the US in FY22 than it did in FY21. This, along with a ramp up in existing products, should enable faster growth in FY22,” the report added.