Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
US prospects paying
A volatile quarter for most of the pharma companies due to specific
opportunities either in this quarter or in the base causing sharp swings in
reported earnings growth. While Dr Reddy’s and Cadila showed strong
positive earnings growth, Ranbaxy had a sharp decline due to a high base
situation. Growth was weaker in domestic formulations segment for most
companies except Cadila. Operating margins were lower due to enhanced
marketing efforts or commissioning of new facilities except Cadila and Dr
Reddy’s where high margin opportunities drove margins higher. Dr
Reddy’s, Torrent and Cadila are our preferred picks based on better
growth in India and specific approvals in the US.
Earnings growth driven by US opportunities
q US business determined earnings trajectory for most of the Indian pharma
names for 4QFY11.
q While Dr Reddy’s and Cadila were strong beneficiaries, Ranbaxy earnings
declined sharply on YoY basis due to a high base in the US (Valtrex
contribution).
q Dr Reddy’s benefited from market share gains in Prevacid, Prilosec OTC and
recent launch of Allegra D24. We see three major product approvals (Allegra
D 24 OTC, Arixtra (fondaparinux) and Zyprexa) that would result in 5%+
upgrade for FY12.
q Cipla also saw earnings decline due to sale of i-pill brand contributing to onetime
profits same quarter last year.
q Most of the companies have been filing aggressively to build strong pipelines
and have been executing well on gaining market shares in their existing
products in the US market.
Weak quarter for domestic market
q 4QFY11 domestic formulations growth was weaker than usual as indicated by
IMS estimates earlier.
q Strong competitive pressure with price discounts being given by companies
like Cipla and GSK India to garner market share has been one of reasons for
slower growth.
q Another reason for slower net sales growth has been fading of tailwind from
excise duty reduction that is already getting in to the base.
q Domestic formulation is the most profitable segment. Considering low capital
requirements, companies with a relatively larger share of domestic
formulation revenues offer better visibility of profits and cash flows.
q Our preference for Cadila, Torrent and Sun Pharma stems from relatively high
exposure to domestic market and strong growth expectation going in to
FY12.
Valuations high; so is earning growth
q While valuations in Indian pharma sector have moved up substantially, they
are reasonable in context of the earnings growth that companies in the sector
are likely to deliver.
q We expect the US to be a strong driver of earnings growth over coming two
years specifically for companies with high exposure to that market namely Dr
Reddy’s, Ranbaxy, Sun Pharma, Lupin and Cadila.
q We see earning upgrades especially in the companies with strong pipeline in
the US market as those materialize in to launches.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
US prospects paying
A volatile quarter for most of the pharma companies due to specific
opportunities either in this quarter or in the base causing sharp swings in
reported earnings growth. While Dr Reddy’s and Cadila showed strong
positive earnings growth, Ranbaxy had a sharp decline due to a high base
situation. Growth was weaker in domestic formulations segment for most
companies except Cadila. Operating margins were lower due to enhanced
marketing efforts or commissioning of new facilities except Cadila and Dr
Reddy’s where high margin opportunities drove margins higher. Dr
Reddy’s, Torrent and Cadila are our preferred picks based on better
growth in India and specific approvals in the US.
Earnings growth driven by US opportunities
q US business determined earnings trajectory for most of the Indian pharma
names for 4QFY11.
q While Dr Reddy’s and Cadila were strong beneficiaries, Ranbaxy earnings
declined sharply on YoY basis due to a high base in the US (Valtrex
contribution).
q Dr Reddy’s benefited from market share gains in Prevacid, Prilosec OTC and
recent launch of Allegra D24. We see three major product approvals (Allegra
D 24 OTC, Arixtra (fondaparinux) and Zyprexa) that would result in 5%+
upgrade for FY12.
q Cipla also saw earnings decline due to sale of i-pill brand contributing to onetime
profits same quarter last year.
q Most of the companies have been filing aggressively to build strong pipelines
and have been executing well on gaining market shares in their existing
products in the US market.
Weak quarter for domestic market
q 4QFY11 domestic formulations growth was weaker than usual as indicated by
IMS estimates earlier.
q Strong competitive pressure with price discounts being given by companies
like Cipla and GSK India to garner market share has been one of reasons for
slower growth.
q Another reason for slower net sales growth has been fading of tailwind from
excise duty reduction that is already getting in to the base.
q Domestic formulation is the most profitable segment. Considering low capital
requirements, companies with a relatively larger share of domestic
formulation revenues offer better visibility of profits and cash flows.
q Our preference for Cadila, Torrent and Sun Pharma stems from relatively high
exposure to domestic market and strong growth expectation going in to
FY12.
Valuations high; so is earning growth
q While valuations in Indian pharma sector have moved up substantially, they
are reasonable in context of the earnings growth that companies in the sector
are likely to deliver.
q We expect the US to be a strong driver of earnings growth over coming two
years specifically for companies with high exposure to that market namely Dr
Reddy’s, Ranbaxy, Sun Pharma, Lupin and Cadila.
q We see earning upgrades especially in the companies with strong pipeline in
the US market as those materialize in to launches.
No comments:
Post a Comment