If you look at industrial production data, one may conclude India’s population has been gripped by chronic indigestion of epic proportions. The Index of Industrial Production’s (IIP’s) digestive enzymes and antacids (including proton pump inhibitors) category has been growing rapidly and become a significant contributor to overall growth.
In October, IIP grew by 2.2% of which antacids alone contributed 1.37 percentage points, a trend that has continued in fiscal year 2018 (FY18) so far. This group grew by 53.9% in October and in FY17, it grew by 122.6%. Why it is showing such high growth is a puzzle. One way of solving it is to see if industry data supports it.
AIOCD Awacs’s PharmaTrac database collates retail sales of medicines in the country. Within the broad gastrointestinal grouping, sub-categories related to the antacids segment in IIP are not showing this kind of growth.
In the April-October period, for instance, our calculations using AIOCD’s data show this sub-group’s volume sales declined by 2.8% over a year ago. Even in FY17, while IIP data showed growth of 122.6% for antacids and related products, the sub-group fell by 1.1%. Since we made assumptions about groupings to calculate growth, some variation can be expected but not to this extent.
Consider the largest product group in this category, anti-ulcerants and acid pump inhibitors. It grew by 2.9% in April-October and by 1.5% in FY17.
Domestic retail sales data does not support the high growth in industrial production numbers for antacids and related products.
Even exports don’t support the high growth trend, shows data from the department of commerce. In April-September 2017, volume exports of omeprazole and lansoprazole fell by 21% over a year ago, while that of ranitidine and fellow drugs declined by 2.2%. Sales of a third category, with products such as sodium bicarbonate and aluminium hydroxide, fell by 20%.
If domestic and export sales are not supporting high production numbers then it is unclear as to what is. Small discrepancies in data collected on this scale are understandable but the disproportionate influence on growth relative to its size—it has a weight of a mere 0.22% in IIP—should be a concern.
With the headline numbers turning this noisy, the general index should be given less importance in analysis compared to the product/sector-wise indices.