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Glaxosmithkline Pharma (GLAX.BO; Rs2,370.00; 3L)
Takeaways from Mumbai — GSK Pharma presented at the Citi India Investor
Conference in Mumbai. Below are key takeaways.
What's New — GSK Pharma outlined how it expects the business to shape up
by 2015. It sees patented products making up c4-6% of sales, vaccines at c20%
(11% now), derma at c20% (16-17% now), inlicensed/branded generics at c7-8%
& DPCO covered sales at c21% (25% now). Product launches would keep
increasing, with 2HCY11 seeing more launches than in 1H. Synflorix vaccine
launch is likely in Sept '11, with all approvals in place, and branded generics
launches will continue. The company is also considering a progressive dividend
distribution policy, given the high cash on books and dearth of the right (price, fit)
acquisition opportunities.
Market growth to stay steady — GSK Pharma expects the market growth to be
sustained in the 13-15% range over the medium to longer term, driven by
favorable demographics, rising share of chronic diseases and greater
penetration. The company expects to grow in line with or faster than market, on
the back of rising number of launches (patented products, vaccines, inlicensed &
branded generics) and penetration into rural areas (No.2 by market share) and
hospitals.
Competition to increase, but not easy for new entrants — GSK Pharma
believes that most Big Pharma companies are likely to get more aggressive in
the Indian market. However, it may be difficult to gain scale in the market, given
the complexities involved in geographic breath and distribution. New entrants are
often resorting to outlicensing products or entering into distribution tie-ups with
existing players – this is an opportunity for companies such as GSK Pharma,
given its established presence in the market.
Maintain Sell (3L) — While we are positive on the business, we believe
valuations leave limited room for upside.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Glaxosmithkline Pharma (GLAX.BO; Rs2,370.00; 3L)
Takeaways from Mumbai — GSK Pharma presented at the Citi India Investor
Conference in Mumbai. Below are key takeaways.
What's New — GSK Pharma outlined how it expects the business to shape up
by 2015. It sees patented products making up c4-6% of sales, vaccines at c20%
(11% now), derma at c20% (16-17% now), inlicensed/branded generics at c7-8%
& DPCO covered sales at c21% (25% now). Product launches would keep
increasing, with 2HCY11 seeing more launches than in 1H. Synflorix vaccine
launch is likely in Sept '11, with all approvals in place, and branded generics
launches will continue. The company is also considering a progressive dividend
distribution policy, given the high cash on books and dearth of the right (price, fit)
acquisition opportunities.
Market growth to stay steady — GSK Pharma expects the market growth to be
sustained in the 13-15% range over the medium to longer term, driven by
favorable demographics, rising share of chronic diseases and greater
penetration. The company expects to grow in line with or faster than market, on
the back of rising number of launches (patented products, vaccines, inlicensed &
branded generics) and penetration into rural areas (No.2 by market share) and
hospitals.
Competition to increase, but not easy for new entrants — GSK Pharma
believes that most Big Pharma companies are likely to get more aggressive in
the Indian market. However, it may be difficult to gain scale in the market, given
the complexities involved in geographic breath and distribution. New entrants are
often resorting to outlicensing products or entering into distribution tie-ups with
existing players – this is an opportunity for companies such as GSK Pharma,
given its established presence in the market.
Maintain Sell (3L) — While we are positive on the business, we believe
valuations leave limited room for upside.
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