Q4FY12 Results Preview Pharma Excellent overall growth :: Centrum

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Q4FY12 Results Preview

Pharma

Excellent overall growth

We expect the thirteen pharma companies under our coverage to post 29%YoY growth in sales during the quarter due to FTF opportunities of generic Lipitor and Zyprexa in the US market. Ranbaxy Labs (RLL) is expected to report 76%YoY growth in revenues from generic Lipitor in the US. Pharma companies with higher exports are likely to lose due to the 4.3%QoQ appreciation of rupee against the dollar. However, they would benefit from MTM forex gains. We expect these companies to report 54%YoY growth in EBIDTA and 400bps improvement in EBIDTA margin from 20.6% to 24.6%. We expect 47%YoY improvement in net profit due to strong sales growth and margin improvement. Overall, we expect pharma companies to report excellent performance for the quarter.

m  Good revenue growth: We expect revenue growth of pharma companies at 29% on a YoY basis, on the back of good growth in the US market and benefit of forex gains from appreciation of rupee. We expect Dr. Reddy’s Labs (DRL) and RLL to benefit from FTF of generic olanzapine and Lipitor in the US respectively.

m   Sharp Improvement in EBITDA margin: We expect the EBITDA margin of our coverage companies to improve from 20.6% to 24.6% due to high margin FTF opportunities for generic Lipitor and olanzapine in the US market.

m  MTM gains due to currency fluctuations: We expect the companies to benefit from MTM gains due to 4.3% appreciation of rupee during the quarter. However, these companies would have lower revenue growth.

m  Lupin remains our preferred pick in the space: Lupin continues to be our best pick in the sector on account of improvement in its performance across geographies. The company is likely to report good growth in the domestic market, US, Europe and Japan. The launch of generic Seroquel and Geodon in the US would drive the growth.