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● Ranbaxy should report a loss in Sep quarter due to MTM loss on
forex derivatives. Additionally, there could be one-time charges for
closure of Gloversville plant in NY. Ranbaxy has started issuing
ESOPs at face value and EPS impact is Rs1/share every year.
● Sun continues to deliver strong growth in India and the US, and
should achieve 47% of its FY12 sales guidance in the first half.
● Lupin’s profit should be boosted by US$20 mn milestone income
from Medicis. The base business benefits from several US
approvals, currency benefits (Yen, USD) and strong India growth.
● Glenmark’s profits should be boosted by US$25 mn milestone
income from Sanofi. However, there could be MTM loss, as
Glenmark converted a portion of its debt into USD during 2Q12.
● Dr. Reddy’s strong performance in the US and CIS should be offset
by weakness in India and PSAI. The balance should tilt in the favour
of DRL from 3Q12 onwards as Fonda and Allegra D-24 ramp up.
● Cipla is expected to report domestic growth of 10%, and its
margins should benefit from INR depreciation.
● GSK should grow at industry average and we expect its margin at
34%.
Ranbaxy to report loss due to MTM loss on forex derivative
We expect Ranbaxy to report loss in the September quarter due to
MTM loss on its US$750 mn forex derivatives (10% INR depreciation
QoQ). Additionally, there could be one-time charges associated with
the closure of Gloversville plant in NY (not factored in estimates). The
US business for Ranbaxy continues to be steady, with Ranbaxy
maintaining its volume share in both the key products in the US—
Aricept and Valtrex (though pricing in Aricept dropped after
genericisation). We also noted that Ranbaxy has started the allotment
of the ESOPs issue at face value of Rs5 and allotted 325,000 shares
on 4 Oct. Total shares to be allocated under the scheme are 3 mn
over the next three years, and this implies an EPS loss of Rs1/share
every year.
Sun pharma: Both India and US continue to be strong
India sales growth continues to be strong at 18%, and the US
business saw the launch of an important product by Tao—Imiquimod
cream—in the last week of July. Other launches/approvals were
Finasteride, Ranitidine and Alfuzosin, Gemcitabine, Galantamine,
Letrozole, Naratriptan and Sumatriptan IV. As per our 1H12 estimates,
Sun should achieve 47% of its FY12 sales guidance in the first half.
Lupin: Sep quarter to be better than Jun 2011 quarter
2Q12 had several positives for Lupin: (1) After muted approvals in the
US in June 2011, Lupin got approval for higher strengths of Lotrel,
Tramadol ER, Keppra XR, first OC approval (Nor-QD) in 2Q12 (2) a
R&D deal with Medicis yielding in US$20 mn upfront payment (3)
currency playing in favour, with yen appreciating by 10% YoY and INR
depreciating by 2.3% QoQ (average). On the branded business,
performance has been mixed, with prescriptions up 6% YoY for
Suprax and down 4% YoY for Antara (and flattish sequentially).
Margins for Lupin are expected to improve sequentially due to higher
growth in India and currency benefits.
Glenmark: One-offs include milestone income, MTM loss
One-offs include milestone income of US$25 mn from Sanofi and also
potential milestone income from the completion of Ph I trials on GRC
15300. There were not many approvals in the US during this quarter
(two—Ursodiol and Nizatidine). There could be possible MTM loss, as
Glenmark converted a significant portion of its debt into foreign
currency during 2Q12 (therefore, we assume other income as nil).
Cipla: Domestic growth remains the key
As per AIOCD, Cipla’s growth in domestic market remains weak and
is of the same level as the June 2011 quarter (10%). Cipla’s margins
would benefit from the INR depreciation, but there could be possible
MTM loss on forex hedges (US$170 mn).
Reddy’s: Strong US and CIS offset by weak India & PSAI
2Q12 had several positives for DRL: (1) ban on Nimesulide revoked in
India and (2) launch of Fonda and Allegra D-24 and Lotrel higher
strengths in the US. However, the quarter had some negatives too: (1)
import alert on Mexico facility impacting US$30 mn annual sales, (2)
production hit due to labour strikes and (3) the recall of some batches
of Zocor. Excluding DEPB impact, 3Q12 should see sequential
recovery for the company.
GSK Pharma: Continues to grow at industry growth
GSK’s India growth was much better than several Indian peers in the
last quarter. We expect Glaxo to continue to grow at industry average
in the September quarter too. However, we expect margins to be at
34% as the newly recruited sales force in the last two quarters is not
yet fully productive.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● Ranbaxy should report a loss in Sep quarter due to MTM loss on
forex derivatives. Additionally, there could be one-time charges for
closure of Gloversville plant in NY. Ranbaxy has started issuing
ESOPs at face value and EPS impact is Rs1/share every year.
● Sun continues to deliver strong growth in India and the US, and
should achieve 47% of its FY12 sales guidance in the first half.
● Lupin’s profit should be boosted by US$20 mn milestone income
from Medicis. The base business benefits from several US
approvals, currency benefits (Yen, USD) and strong India growth.
● Glenmark’s profits should be boosted by US$25 mn milestone
income from Sanofi. However, there could be MTM loss, as
Glenmark converted a portion of its debt into USD during 2Q12.
● Dr. Reddy’s strong performance in the US and CIS should be offset
by weakness in India and PSAI. The balance should tilt in the favour
of DRL from 3Q12 onwards as Fonda and Allegra D-24 ramp up.
● Cipla is expected to report domestic growth of 10%, and its
margins should benefit from INR depreciation.
● GSK should grow at industry average and we expect its margin at
34%.
Ranbaxy to report loss due to MTM loss on forex derivative
We expect Ranbaxy to report loss in the September quarter due to
MTM loss on its US$750 mn forex derivatives (10% INR depreciation
QoQ). Additionally, there could be one-time charges associated with
the closure of Gloversville plant in NY (not factored in estimates). The
US business for Ranbaxy continues to be steady, with Ranbaxy
maintaining its volume share in both the key products in the US—
Aricept and Valtrex (though pricing in Aricept dropped after
genericisation). We also noted that Ranbaxy has started the allotment
of the ESOPs issue at face value of Rs5 and allotted 325,000 shares
on 4 Oct. Total shares to be allocated under the scheme are 3 mn
over the next three years, and this implies an EPS loss of Rs1/share
every year.
Sun pharma: Both India and US continue to be strong
India sales growth continues to be strong at 18%, and the US
business saw the launch of an important product by Tao—Imiquimod
cream—in the last week of July. Other launches/approvals were
Finasteride, Ranitidine and Alfuzosin, Gemcitabine, Galantamine,
Letrozole, Naratriptan and Sumatriptan IV. As per our 1H12 estimates,
Sun should achieve 47% of its FY12 sales guidance in the first half.
Lupin: Sep quarter to be better than Jun 2011 quarter
2Q12 had several positives for Lupin: (1) After muted approvals in the
US in June 2011, Lupin got approval for higher strengths of Lotrel,
Tramadol ER, Keppra XR, first OC approval (Nor-QD) in 2Q12 (2) a
R&D deal with Medicis yielding in US$20 mn upfront payment (3)
currency playing in favour, with yen appreciating by 10% YoY and INR
depreciating by 2.3% QoQ (average). On the branded business,
performance has been mixed, with prescriptions up 6% YoY for
Suprax and down 4% YoY for Antara (and flattish sequentially).
Margins for Lupin are expected to improve sequentially due to higher
growth in India and currency benefits.
Glenmark: One-offs include milestone income, MTM loss
One-offs include milestone income of US$25 mn from Sanofi and also
potential milestone income from the completion of Ph I trials on GRC
15300. There were not many approvals in the US during this quarter
(two—Ursodiol and Nizatidine). There could be possible MTM loss, as
Glenmark converted a significant portion of its debt into foreign
currency during 2Q12 (therefore, we assume other income as nil).
Cipla: Domestic growth remains the key
As per AIOCD, Cipla’s growth in domestic market remains weak and
is of the same level as the June 2011 quarter (10%). Cipla’s margins
would benefit from the INR depreciation, but there could be possible
MTM loss on forex hedges (US$170 mn).
Reddy’s: Strong US and CIS offset by weak India & PSAI
2Q12 had several positives for DRL: (1) ban on Nimesulide revoked in
India and (2) launch of Fonda and Allegra D-24 and Lotrel higher
strengths in the US. However, the quarter had some negatives too: (1)
import alert on Mexico facility impacting US$30 mn annual sales, (2)
production hit due to labour strikes and (3) the recall of some batches
of Zocor. Excluding DEPB impact, 3Q12 should see sequential
recovery for the company.
GSK Pharma: Continues to grow at industry growth
GSK’s India growth was much better than several Indian peers in the
last quarter. We expect Glaxo to continue to grow at industry average
in the September quarter too. However, we expect margins to be at
34% as the newly recruited sales force in the last two quarters is not
yet fully productive.
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