Visit http://indiaer.blogspot.com/ for complete details Strides Arcolab; Initiation of coverage: playing the niche segment
Focused on specialised sterile products
Strides Arcolab (Strides) is engaged in the manufacture of a
wide range of pharmaceutical products, including branded
generics and sterile products. The company derived 27% of sales
from the Specialty division for 2009. We forecast total sales and
earnings to increase at CAGRs of 26% and 76%, respectively,
from 2010-12 driven by a 55.2% CAGR in the specialty
business for the period.
We initiate coverage with a 1 (Buy) rating and six-month target
price of Rs587 based on our SOTP valuation.
Increased filings and approvals in niche areas
Strides specialises in penicillins, penems, peptides, and
oncology products, and also focuses on injectable products that
face little price erosion following the expiry of their patents. The
company has filed 99 abbreviated new drug applications
(ANDA) in the US (72 in steriles and 27 in oncology), and has
received 29 approvals in the steriles space in the US.
Pfizer and GSK deals validate foray into injectables
Pfizer (PFE US, US$17.38, 3) and GlaxoSmithKline (GSK)
(Not rated) have signed exclusive deals with Strides for
products, pre-dominantly injectables (mainly in oncology),
covering the US and other markets, respectively.
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