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Pharma Pill August 2011 -Monthly Update
ICICI Securities Limited
Q 1 F Y 1 2 - G r o w t h i n t a c t , m a r g i n s u n d e r p r e s s u r e
In July and early August most of the companies from the pharma
universe declared Q1FY12 numbers. Although lower domestic growth
was off-set by strong growth in the US and emerging markets, we could
see margin pressure across the universe. Lower realizations in the US
and higher raw materials and staff cost was the reason cited by most of
the companies. In terms of overall performance, Glenmark, Strides, Ipca
and Divi’s were the standout performers. Sun’s numbers got boost on
account of improved Taro profitability. Lupin and Aurobindo had to cope
up with lower US realizations and higher operating cost despite decent
sales growth. Cadila had a `rest’ quarter after a hectic FY11. Cipla,
despite muted top-line growth was able to maintain margins on account
of changed product mix. In case of Dr Reddy’s good show in the US and
Russia was marred by tepid India growth. Ranbaxy had to cope up with
lower Aricept (Anti-Alzheimer’s) realization and margin pressure in base
business. Higher licensing fee boosted the top-line of Torrent whilst
lower licensing fee dented Biocon numbers. Opto continued to register
robust growth, thanks to acquisitions in the past. In the domestic market
only Glenmark, Lupin, and Sun (Adjusted) among others were able to
clock above average growth.
On the R&D front, Glenmark completed phase 1 trial evaluating GRC
15300 as a treatment for pain and might sought candidate for outlicensing for further development. On the regulatory front, Cadila
received USFDA approval for its Baddi facility. Ironically the same
company received warning letter for violation of CGMP practices for its
Ahmedabad facility. In a unique global tie-up US based Gilead has tied
up with four Indian players to develop Anti-Aids drugs. On the M&A front
Dr Reddy’s acquired JB Chemical’s Russian prescription business while
Cadila acquired Animal healthcare company in Germany.
S e c t o r v i e w
The healthcare index continued its out-performance vis-à-vis broader
markets in July. As mentioned in the July issue, this was mainly on
account of relative resilience to global shocks, in line Q1FY12 numbers
amidst margin pressure and better visibility of future performance. The
margin pressure was mainly on account of pricing pressure in acute
therapies in both the US and India. The field force expansion in India also
added some pressure. Going ahead, we expect improvement on this
front on account of chronic therapy focus, improved contribution from
the new field force and rural penetration. Good traction from the US,
Japan and other developed markets supported by product approvals, a
growing presence in Pharmerging markets and a strong foothold in India
are some aspects that will continue to weigh on the relative out
performance vis-à-vis broader markets.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pharma Pill August 2011 -Monthly Update
ICICI Securities Limited
Q 1 F Y 1 2 - G r o w t h i n t a c t , m a r g i n s u n d e r p r e s s u r e
In July and early August most of the companies from the pharma
universe declared Q1FY12 numbers. Although lower domestic growth
was off-set by strong growth in the US and emerging markets, we could
see margin pressure across the universe. Lower realizations in the US
and higher raw materials and staff cost was the reason cited by most of
the companies. In terms of overall performance, Glenmark, Strides, Ipca
and Divi’s were the standout performers. Sun’s numbers got boost on
account of improved Taro profitability. Lupin and Aurobindo had to cope
up with lower US realizations and higher operating cost despite decent
sales growth. Cadila had a `rest’ quarter after a hectic FY11. Cipla,
despite muted top-line growth was able to maintain margins on account
of changed product mix. In case of Dr Reddy’s good show in the US and
Russia was marred by tepid India growth. Ranbaxy had to cope up with
lower Aricept (Anti-Alzheimer’s) realization and margin pressure in base
business. Higher licensing fee boosted the top-line of Torrent whilst
lower licensing fee dented Biocon numbers. Opto continued to register
robust growth, thanks to acquisitions in the past. In the domestic market
only Glenmark, Lupin, and Sun (Adjusted) among others were able to
clock above average growth.
On the R&D front, Glenmark completed phase 1 trial evaluating GRC
15300 as a treatment for pain and might sought candidate for outlicensing for further development. On the regulatory front, Cadila
received USFDA approval for its Baddi facility. Ironically the same
company received warning letter for violation of CGMP practices for its
Ahmedabad facility. In a unique global tie-up US based Gilead has tied
up with four Indian players to develop Anti-Aids drugs. On the M&A front
Dr Reddy’s acquired JB Chemical’s Russian prescription business while
Cadila acquired Animal healthcare company in Germany.
S e c t o r v i e w
The healthcare index continued its out-performance vis-à-vis broader
markets in July. As mentioned in the July issue, this was mainly on
account of relative resilience to global shocks, in line Q1FY12 numbers
amidst margin pressure and better visibility of future performance. The
margin pressure was mainly on account of pricing pressure in acute
therapies in both the US and India. The field force expansion in India also
added some pressure. Going ahead, we expect improvement on this
front on account of chronic therapy focus, improved contribution from
the new field force and rural penetration. Good traction from the US,
Japan and other developed markets supported by product approvals, a
growing presence in Pharmerging markets and a strong foothold in India
are some aspects that will continue to weigh on the relative out
performance vis-à-vis broader markets.
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