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Aarti Drugs Ltd. Soar in FY20, China Factor to Prove a Big Hit for the Indian Company Post the COVID-19 Period

Out of several sectors which touched their new heights during the COVID-19 period, Indian pharma and Active Pharmaceutical Ingredient (API) industries are on the cloud nine. India’s Aarti Drugs Ltd., which is primarily engaged in the manufacturing of key pharma ingredients has clocked an overall Y-O-Y sales jump to INR 544.67 crore, witnessing an increase of nearly 34 percent for the quarter ended June 2020. The API segment which contributes approximately 85 percent to the company’s total revenue, recorded Y-O-Y growth of 28 percent, reaching INR 460 crore for the quarter ended June 2020. Serving both the international and domestic market, the company’s exports showed a sharp spike of 29.13 per cent which contributed to 1/3rd of the company’s revenue in FY20. The recent India-China border standoff has highlighted the potential risk to the Indian pharmaceutical sector due to its overdependence on the dragon for the essential raw materials. This has been backed by the global pharma industry’s strong transition towards non-Chinese products amid waves of distrust raging towards China which escalated the price of almost all of its APIs by 20-30 per cent after March. These factors served as a catalyst for the Arti Drugs’ API segment which opportunistically tried its every bit to expand its global and domestic footprints at the crucial moment. Strengthened by a remarkable volume growth and increasing product margins, Aarti Drugs registered soaring demand for APIs for antibiotic drugs such as ciprofloxacin, norfloxacin etc. for which China has remained a traditional supplier in the country. Gushed by a strong shift in the global preferences not only Aarti Drugs, but also several major Indian players like Dr Reddy's, Biocon and Laurus Labs have recorded abnormally high demand for several products in their portfolio post the pandemic. Analysts believe that in longer terms, Indian API companies will record strong gains from strengthening demand across all the major nations who are looking for secured supply chains and a more trusted trade partner.