Q 4 n umb e r s mi x e d , a p p r o v a l mome n t um p i c k s
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The Q4FY12 numbers reported by I-Direct universe companies were a
mixed bag with most of the companies reported robust exports, thanks
to ~10-15% rupee depreciation against all major currencies and good
traction from the US and RoW markets. On the domestic front also, there
were very few players that reported muted growth. On the EBITDA front,
however, there was some pressure on account of high operating
expenses and year end provisions.
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Sun, Divi’s, Glenmark and Apollo Hospitals were standout performers
both in terms of sales growth and profitability growth. While Sun got a
boost on account of one Doxil launch and Taro numbers, Divi’s numbers
vindicated CRAMS revival. On the other hand, companies such as Lupin,
Ipca, Cadila and Jubilant registered strong topline growth but their
profitability was hampered by high operating expenses, higher tax
provisions and one-offs. Unichem, Elder and Aurobindo reported a weak
set of overall numbers.
On the USFDA approvals front, we saw good momentum with as many
as 16 ANDAs getting approved in May. Sanofi/BMS owned anti-clotting
drug Plavix (generic name Clopidogrel), the second largest pharma brand
in the world, which went off-patent recently, saw at least four Indian
approvals for generic launch in this month.
On the generics front, the USFDA won US Senate approval for its US$6.4
billion fee agreement with some companies that will fund regulatory
reviews of new medicines and devices through 2017. The legislation
passed by the Senate will raise the so-called user fees that companies
will pay to the USFDA for safety and efficacy reviews by more than $2
billion from the previous five-year period. The bill is scheduled for a vote
in the House of Representatives where it can then move toward
becoming law by October 1.
Finally, on the domestic front, Indian formulations continued their growth
trajectory in April by growing 18.4% YoY. Companies with
cardiovascular (CVS) and anti-diabetic portfolios grew significantly.
Among individual players, Glenmark and Ipca from the I-direct universe
registered strong growth of 37% and 21%, respectively. Other players
such as Lupin, Cadila, Sun, Torrent and Indoco also grew between 15%
and 20%. Elder and Unichem, however, registered muted growth of 9%
and 5%, respectively.
S e c t o r v i e w
With an upbeat set of Q4 numbers and stable outlook based on growing
US and RoW market opportunities, the BSEHC is expected to continue its
outperformance vis-à-vis the Sensex and broader BSE 500 Index.
Investors are expected to remain circumspect amid Euro adversities,
global slowdown, dismal domestic macros and policy inactions. This will
further strengthen the safe haven status of Healthcare and the ~36%
premium of BSEHC over Sensex reflects the same. Pricy valuations of
some of the players, however, remain a concern
Click link: Health Check - May, 2012
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