Visit http://indiaer.blogspot.com/ for complete details Healthy growth expected
We remain bullish on the Pharma sector on the basis of
sustained high double-digit growth in the domestic
market, strong order books in the CRAMs space and
turnaround stories in both the regulated markets as
well as the emerging markets. The midcaps are
expected to outperform – IPCA Labs, Glenmark, Biocon
and a rechristened Jubilant Lifesciences are expected to
come out with stellar results. The large caps are
expected to demonstrate more subdued growth. Sun
Pharma, in particular, is expected to put up a dismal
show this quarter. Aurobindo and Dishman are
expected to pick up pace in H2FY11.
Domestic and Emerging markets to boost sales: We
believe companies with high exposure to domestic
markets as well as those with significant operations in
emerging markets such as Africa, Russia and Latin
America will benefit from the high double-digit growth
in these markets – most notably IPCA Labs.
MNCs continue playing ‘Good Cop, Bad Cop’: While
the global Pharma giants are boosting up the CRAMs
order books and revenues via licensing pacts and
export contracts to benefit companies like Jubilant,
Biocon and Aurobindo on the one hand, they are going
all out on legal grounds to stop the advent of generics,
the intention being to squeeze out maximum profits
from their patented drugs before they go off-patent on
the other – because of which major generic players like
Sun Pharma suffered.
Generics pipeline – growing stronger: Sun, Ranbaxy,
Glenmark, Aurobindo and Dr Reddy’s have consistently
been receiving USFDA approvals for various ANDAs,
which includes some big names like Crestor and
Aricept. Generics exports are expected to grow by 15-
20% on the back of an increasing number of drugs
going off-patent.
Sharp Rupee appreciation might throw in surprises:
The sharp appreciation of the rupee over the US dollar
towards the end of Q2 may throw in a few surprises for
the exporters – positive for companies with US debt
and long contracts like Ranbaxy and Aurobindo,
negative for those with large unhedged exposures.
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