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Pharmaceuticals
Pharma companies reported earnings for the quarter are likely to be see
declines in most large names except Dr Reddy's. This is because of a high
base in case of Ranbaxy, Cadila and Sun Pharma.
Domestic formulations growth should be steady on a YoY basis and strong
on QoQ basis due to a seasonally strong quarter. Ebitda margins are also
usually higher this quarter because of higher contribution of domestic
business. Most pharma companies have invested strongly over the last
two years in to marketing efforts in domestic market to enhance growth
in this segment.
Exports growth should remain reasonably strong in emerging markets
though US sales for companies like Ranbaxy and Sun Pharma would
decline due to a high base situation.
Despite ramp up of market share in Aricept and an expected pick up in
domestic formulations sales, Ranbaxy should see sharp decline in YoY
profits due to a high base (Valtrex same quarter last year).
Even for Dr Reddy's while YoY growth will come through as a number of
products have been added over the last year, QoQ profits will decline due
to Allegra D24 contribution in the US in 4QFY11 (this product is now sold
OTC). FY12 remains a blockbuster year for Dr Reddy's with launch of
Zyprexa in October 2011 and Geodon in March 2012. Potential approval of
Allegra D24 OTC and fondaparinux could further add to earnings.
We expect Sun Pharma to report strong revenue growth because of Taro
integration, however profits will see YoY decline due to Eloxatin generic
sales in the US in same quarter last year.
Cadila's profit growth numbers will be muted due to one time milestone
payment from Abbott in same quarter last year. Despite commissioning of
Indore SEZ and consequent margin pressure, Lupin's profit growth will be
modest led by strong domestic business and market share gains in the US
business.
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