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ICICI Securities Ltd. | Retail Equity Research
October 18, 2017
Monthly Update
Respite on GST but US stress to persist in Q2
l-direct coverage companies are expected to witness a revival on the
domestic front post-GST implementation in Q2. However, no respite is likely
on the US front as the core issue of pricing pressure continues to weigh.
Accordingly, we expect the I-direct universe to register mere ~3% YoY
growth to | 39389 crore. US business (select pack) is expected to decline
11% YoY to | 10452 crore. On the domestic front, we expect ~10% YoY
growth to | 9334 crore (select pack) as most companies are expecting
normalcy to be back in the distribution channels. However, due to GST
related changes in accounting and reporting, domestic growth numbers
may witness a marginal negative impact. On the companies front, Cadila
(due to launch of limited competition gLialda in the US) is expected to
register strong growth. On the other hand, 11 out of 19 companies of I-
direct healthcare universe are expected to register negative or low single
digit growth.
EBITDA of the I-direct healthcare universe is expected to decline 13% YoY
to | 8315 crore. EBITDA margins are likely to decline 388 bps YoY to 21%.
An adverse product mix, increase in R&D expenditure and higher plant
related fixed costs are likely to cause a sharp margin erosion for the
universe during the quarter. Net profit is expected to decline ~17% YoY to
| 4997 crore, mainly due to a subdued operational performance.
On the regulatory front, Sun Pharma’s Dadra & Nagar Haveli formulation
plant has received an establishment inspection report (EIR) from the
USFDA, thus effectively closing the Form 483 observation letter that was
issued by the USFDA on April 13, 2017.
On the acquisition front, Lupin has acquired US based Symbiomix
Therapeutics, which has one branded oral bacterial vaginosis (BV) medicine
Solosec (approved by USFDA on September 15, 2017). The acquisition has
been made for a cash consideration of US$ 150 million including US$50
million upfront, other time based contingent and sales based royalty
payment (low mid teen). The acquisition will be funded from internal funds.
The company expects five to six years of payback of this acquisition. Lupin
is already selling branded Methergine in the gynaecology segment in US.
Finally, the Indian pharmaceutical market (IPM) grew 2.8% YoY to | 10420
crore for September. The volume growth has shown a revival this month.
However, the price component continues to be a dampener.
GST disturbance to be temporary but respite unlikely on US front
EIRs from the USFDA for clearance of plants are coming faster than
expected. This may further expedite product approvals, thus intensifying
competition. This will further intensify pricing pressure that has been the
core issue compared to compliance. From our I-direct universe, almost all
players with US franchisee are facing intense competition in the US owing
to client consolidation and increase in product approvals, leading to price
erosion in existing products to high single digit to low double digit.
Similarly, other issues/uncertainties in the US like pricing probe by the
Department of Justice (DoJ) and adapting to the bidding process are other
near term overhangs. Back home, domestic growth, post GST
implementation, has shown signs of a recovery. Despite a steep correction
in some stocks, the undercurrent remains cautious for the sector. However,
we expect the earnings momentum to normalise post H2FY19 on the back
of incremental product launches largely on speciality, biosimilar and
injectables front in the US besides normalising of Indian formulations
growth and recovery in emerging markets.
Health Check
Health Check
Stocks Performance
Mcap
Company 1M 3M YTD 1Y 17-Oct
Sun Pharma.Inds. 5 -4 -13 -25 131743
Cadila Health. 3 -7 40 28 51028
Cipla 10 11 9 6 49882
Lupin 6 -7 -28 -26 48157
Aurobindo Pharma 1 2 14 -5 44852
Dr Reddy's Labs 8 -12 -22 -21 39551
Divi's Lab. 1 20 12 -28 23287
Biocon 11 -6 22 22 23088
Torrent Pharma. 9 2 0 -19 22337
Glaxosmit Pharma 1 -4 -10 -18 20701
Glenmark Pharma. 2 -10 -31 -33 17297
Natco Pharma 22 0 70 65 17219
Apollo Hospitals 1 -14 -9 -21 14907
Ajanta Pharma -1 -19 -33 -37 10587
Jubilant Life -10 -9 2 -1 10257
Syngene Int. 2 -1 -12 -3 9889
Alembic Pharma 3 -8 -16 -27 9442
Strides Arcolab -10 -15 -17 -9 7917
Pfizer -3 -4 -5 -8 7891
Wockhardt 0 2 -4 -26 7011
Ipca Labs. -5 2 -7 -19 6277
Unichem Labs. 6 -7 -1 -11 2312
Indoco Remedies 24 24 -4 -21 2300
Return (%)
Market cap in | crore
Global Indices Performance
Company 1M 3M YTD 1Y 3Y 5Y
S&P 500 Pharm Index (US) 0 4 14 13 10 13
NASDAQ Biotechnology (US) 2 7 28 27 9 19
S&P Pharmaceuticals (US) 0 -2 10 3 -2 11
DJ Pharma and Biotech (US) 1 7 22 22 10 16
DJ STOXX Healthcare (EU) 2 0 9 11 8 12
TOPIX Pharma Index (Japan) 4 6 10 13 15 19
MSCI World Pharm & Biotech 1 5 20 18 7 13
NSE Pharma 4 -2 -5 -13 -1 12
Return (%)
Research Analyst
Siddhant Khandekar
Mitesh Shah
Harshal Mehta
ICICI Securities Ltd. | Retail Equity Research
Page 2
IPM grows 2.8% YoY in September
The Indian pharmaceutical market (IPM) grew 2.8% YoY to | 10420
crore for September. IPM growth was due to growth in volumes – 9.1%
and new product launches – 2.8%. On the other hand, price growth
continues to be in the negative territory at 9.1%
The fixed dosage combination (FDCs) related market grew marginally at
1.4% while the non FDC market showed growth of 3.3%
Drugs under NLEM list declined 1.7% to | 1100 crore while non-NLEM
drugs grew 3.4% to | 8904 crore. Volume in NLEM and non-NLEM grew
-1.8% and 1.1%, respectively
Among companies under I-direct coverage Cadila, Cipla, Natco, Torrent,
Ajanta and Glenmark have registered higher than industry growth rate
Therapy wise, 11 therapies have shown growth for July. Notable among
them with growth rates- anti-diabetic – 10.7% YoY, cardiac – 5.9% and
derma – 12%. On the other hand, anti-infectives declined 2.4% YoY,
anti-malarials by 25.8%. In all, 450 SKU were launched in July 2017
On a MAT basis, IPM growth was at 6.2% YoY to | 114217 crore
Domestic company’s growth has grown 2.5% YoY while MNC
companies have grown 3.9% in September 2017
Exhibit 1: Domestic formulations - growth trend
[
13.6
8.8
14.5
6.9 8
.9
6.0
9.4
8.0
May-17
5.1
-2.4
2.3
2.8
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-1
7
(%
)
Indian Pharma Market
Source: AIOCD data base, ICICIdirect.com Research
Exhibit 2: Companies growth in domestic market in September, 2017
9.1
-6.8
11.1
4.1 4.1
0.6
10.7
8.4
0.4
-17.5
-2.8
20.5
4.1
-2.3
2.1
6.3
-1.7
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Ajanta
Ale
mbic
Bio
con
Cadila
Cip
la
DR
L
Gle
nm
ark
GS
K P
harm
a
Indoco
Ipca Labs
Lupin
Natco
Novartis
Pfiz
er
Sun P
harm
a
Torrent
Unic
hem
(%
)
Source: AIOCD data base, ICICIdirect.com Research
Therapy wise performance (| crore)
Therapy Sep' 17 Sep' 16 YoY (%) Aug' 17 MoM (%)
Anti-Infectives 1599 1638 -2.4 1537 4.0
Cardiac 1208 1141 5.9 1231 -1.9
GI 1179 1151 2.4 1197 -1.5
Anti Diabetic 906 819 10.7 915 -1.0
Vitamins 898 901 -0.3 909 -1.2
Respiratory 824 806 2.3 754 9.3
Pain 722 728 -0.9 711 1.4
Derma 659 589 12.0 659 0.0
Neuro 604 594 1.8 612 -1.2
Gynaecological 502 496 1.3 510 -1.6
Anti-Neoplastics 214 218 -1.6 209 2.7
Vaccines 198 171 15.5 188 5.4
Ophthal 188 177 6.2 185 1.4
Hormones 181 174 4.1 179 1.5
Blood Related 118 114 3.4 123 -3.8
Urology 122 114 6.8 123 -1.1
Others 128 116 10.2 115 11.5
Sex Stimulants 49 47 3.1 51 -5.4
Stomatologicals 49 46 5.3 50 -2.7
Anti Malarials 71 96 -25.8 64 12.0
Source: AIOCD data base
Top brands in Indian pharma market (MAT; | crore)
Brand Company Therapy Sep' 17 YoY (%)
Mixtard Abbott Anti Diabetic 508.0 4.8
Spasmo Proxyvon PlusWockhardt GI 440.0 38.2
Glycomet Gp USV Anti Diabetic 433.0 19.9
Galvus Met Novartis Anti Diabetic 381.0 26.3
Lantus Sanofi India Anti Diabetic 360.0 29.5
Janumet MSD Anti Diabetic 335.0 30.0
Augmentin GSK Anti-Infectives 317.0 8.1
Liv 52 Himalaya GI 306.0 9.8
Novomix Abbott Anti Diabetic 280.0 31.5
Clavam Alkem Anti-Infectives 279.0 2.1
Source: AIOCD data base
Industry Acute vs Chronic vs Sub Chronic
Acute
49%
Chronic
31%
Sub
Chronic
20%
Source: AIOCD data base; As per AIOCD MAT Sep 2017
ICICI Securities Ltd. | Retail Equity Research
Page 3
IPM grows 1% in Q2FY18
The Indian pharmaceutical market (IPM) grew 1% YoY to | 30037 crore
in Q2FY18. Growth was mainly driven by new product launches – 2.8%
followed by flat volume growth and price decline of 1.8%
The fixed dosage combination (FDCs) related market de-grew 8.7% to
| 541 crore
Drugs under NLEM list declined 5.9% to | 3136 crore while non-NLEM
drugs posted growth of 1.8% to | 25687 crore. Volume de-growth in
NLEM was 3.7% while for non-NLEM the de-growth was 1.1%
Among companies under I-direct coverage Ajanta, Biocon, Glenmark,
Lupin, Sun Pharma, Torrent and Cadila have outperformed IPM growth
Therapy wise, 14 therapies have outpaced IPM growth. Notable among
them with growth rates- anti diabetic –11.3%, cardiac – 6.3% & derma –
10.6%
Domestic companies have grown 0.3% while MNC companies have
grown 3.6% in Q2FY18
Exhibit 3: Domestic formulations - quarterly growth trend
3.8
6.7
2.2
-0.4
7.9
4.83.9
2.6
0.0
4.6
5.0
5.2
4.5
2.5
1.8
1.32.1
-1.8
3.6
3.3
3.7
3.7
3.7
3.7
3.33.0
2.8
12.0
15.0
11.0
7.8
14.1
10.3
8.67.6
1.0
-3.0
-1.0
1.0
3.0
5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18
(%
)
Volumes Price Increases New Products
[
Source: AIOCD data base, ICICIdirect.com Research
Exhibit 4: Company wise growth trends in Q2FY18
6.4
(10.7)
9.7
(1.0)
0.8
4.9 5.5
(8.0)
(16.8)
2.6
(5.8)
7.9
(5.7)
5.8
1.1
4.6
(5.1)
3.8 4.8
(22.0)
(17.0)
(12.0)
(7.0)
(2.0)
3.0
8.0
13.0
18.0
23.0
28.0
Ajanta
Ale
mbic
Bio
con
Cip
la
Dr Reddy's
GS
K P
harm
a
Gle
nm
ark
Indoco
Ipca
Lupin
Natco
Novartis
Pfiz
er
Sanofi In
dia
Sun P
harm
a
Torrent
Unic
hem
Wockhardt
Cadila
(%
)
Source: AIOCD data base, ICICIdirect.com Research
Therapy wise performance (| crore)
Therapy Q2FY18 Q2FY17 YoY (%) Q1FY18 QoQ (%)
Anti-Infectives 4400 4825 -8.8 3698 19.0
Cardiac 3596 3382 6.3 3578 0.5
GI 3521 3486 1.0 3482 1.1
Anti Diabetic 2698 2424 11.3 2696 0.1
Vitamins 2656 2658 -0.1 2580 2.9
Respiratory 2181 2315 -5.8 1723 26.6
Pain 2068 2116 -2.3 1914 8.1
Derma 1905 1723 10.6 1773 7.5
Neuro 1777 1721 3.3 1732 2.6
Gynaecological 1496 1479 1.1 1529 -2.2
Anti-Neoplastics 602 593 1.5 580 3.9
Vaccines 565 512 10.3 569 -0.7
Ophthal 546 517 5.5 572 -4.6
Hormones 517 493 5.0 487 6.2
Blood Related 363 340 7.0 375 -3.0
Urology 360 337 6.7 337 6.7
Others 346 319 8.6 325 6.5
Sex Stimulants 145 141 2.9 159 -9.0
Stomatologicals 144 137 5.5 141 2.3
Anti Malarials 180 257 -30.0 98 84.0
Source: AIOCD data base
ICICI Securities Ltd. | Retail Equity Research
Page 4
Domestic Formulations – I-Direct Coverage universe data summary
Exhibit 5: Domestic formulations – Market share (MAT Value Sep-17)
[
8.4%
4.7%4.2%
3.1%
2.2% 2.2% 2.1%
1.5%1.3%
0.9% 0.7% 0.6% 0.6% 0.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Sun
Cip
la
Cadila
Lupin
Torrent
Dr. R
eddys
Gle
nm
ark
IPCA
Ale
mbic
Unic
hem
Indoco Rem
edie
s
Natco
Ajanta
Bio
con
Market Share
Market Share
Source: AIOCD data base, ICICIdirect.com Research
Exhibit 6: Acute vs Chronic vs Sub Chronic (MAT Value Sep-17)
38
58
21
47 5040
83
67
33
93
41
2336
49
5122
70
4129
36
627
49
0
46
52
58 32
1219
9 1221 23
12 619
714
25
618
0
20
40
60
80
100
120
Ajanta
Ale
mbic
Bio
con
Cip
la
Dr. R
eddys
Gle
nm
ark
Indoco
IPCA
Lupin
Natco
Sun
Torrent
Unic
hem
Cadila
%
Acute Chronic Sub Chronic
Source: AIOCD data base, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 5
Exhibit 7: Top five brands in value terms (MAT value Sep-17)
[5
Sun Brand Therapy Sales (|cr)
1 Volini Pain 235
2 Istamet Anti Diabetic 224
3 Rosuvas Cardiac 221
4 Gemer Anti Diabetic 200
5 Levipil Neuro 186
Cipla Brand Therapy Sales (|cr)
1 Foracort Respiratory 240
2 Duolin Respiratory 190
3 Seroflo Respiratory 154
4 Budecort Respiratory 143
5 Asthalin Respiratory 141
Cadila Brand Therapy Sales (|cr)
1 Skinlite Derma 194
2 Deriphyllin Respiratory 117
3 Pantodac GI 113
4 Mifegest Kit Gynaecological 110
5 Atorva Cardiac 108
Lupin Brand Therapy Sales (|cr)
1 Gluconorm-G Anti Diabetic 191
2 Budamate Respiratory 104
3 Tonact Cardiac 91
4 Rablet-D GI 65
5 Rablet GI 54
Torrent Brand Therapy Sales (|cr)
1 Shelcal Vitamins 186
2 Chymoral FortePain 112
3 Nikoran Cardiac 96
4 Azulix-Mf Anti Diabetic 87
5 Nebicard Cardiac 81
Dr. Reddys Brand Therapy Sales (|cr)
1 Omez GI 113
2 Omez D GI 103
3 Econorm GI 72
4 Atarax Respiratory 71
5 Razo D GI 64
Glenmark Brand Therapy Sales (|cr)
1 Telma Cardiac 178
2 Telma H Cardiac 171
3 Ascoril Plus Respiratory 116
4 Candid Derma 113
5 Candid-B Derma 96
IPCA Brand Therapy Sales (|cr)
1 Zerodol Sp Pain 121
2 Zerodol P Pain 94
3 Hcqs Anti Malarials 84
4 Larinate Anti Malarials 55
5 Glycinorm M Anti Diabetic 47
Alembic Brand Therapy Sales (|cr)
1 Azithral Anti-Infectives 145
2 Althrocin Anti-Infectives 75
3 Wikoryl Respiratory 57
4 Gestofit Gynaecological 55
5 Roxid Anti-Infectives 49
Unichem Brand Therapy Sales (|cr)
1 Losar H Cardiac 102
2 Losar Cardiac 74
3 Ampoxin Anti-Infectives 68
4 Unienzyme GI 61
5 Vizylac GI 32
Natco Brand Therapy Sales (|cr)
1 Hepcinat Anti-Infectives 201
2 Geftinat Anti-Neoplastics 146
3 Veenat Anti-Neoplastics 101
4 Erlonat Anti-Neoplastics 100
5 Natdac Anti-Infectives 88
Indoco Brand Therapy Sales (|cr)
1 Febrex Plus Respiratory 78
2 Cyclopam GI 48
3 Oxipod Anti-Infectives 44
4 Sensodent-K Stomatologicals 38
5 Cital Urology 35
Ajanta Brand Therapy Sales (|cr)
1 Met Xl Cardiac 83
2 Atorfit Cv Cardiac 51
3 Melacare Derma 49
4 Feburic Pain 24
5 Rosufit Cv Cardiac 22
Biocon Brand Therapy Sales (|cr)
1 Insugen Anti Diabetic 107
2 Basalog Anti Diabetic 75
3 Canmab Anti-Neoplastics 34
4 Erypro Blood Related 27
5 Insugen R Anti Diabetic 23
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 6
Exhibit 8: Top five therapies in value term (MAT value Sep-17)
[5
Sun Therapy Sales (|cr)
1 Anti-Infectives 977
2 Cardiac 1850
3 GI 1140
4 Anti Diabetic 931
5 Vitamins 380
Cipla Therapy Sales (|cr)
1 Anti-Infectives 1247
2 Cardiac 659
3 GI 400
4 Anti Diabetic 51
5 Vitamins 75
Cadila Therapy Sales (|cr)
1 Anti-Infectives 730
2 Cardiac 626
3 GI 556
4 Anti Diabetic 143
5 Vitamins 206
Lupin Therapy Sales (|cr)
1 Anti-Infectives 665
2 Cardiac 927
3 GI 310
4 Anti Diabetic 564
5 Vitamins 183
Torrent Therapy Sales (|cr)
1 Anti-Infectives 79
2 Cardiac 772
3 GI 415
4 Anti Diabetic 200
5 Vitamins 373
Dr. Reddys Therapy Sales (|cr)
1 Anti-Infectives 198
2 Cardiac 355
3 GI 540
4 Anti Diabetic 176
5 Vitamins 76
Glenmark Therapy Sales (|cr)
1 Anti-Infectives 377
2 Cardiac 626
3 GI 97
4 Anti Diabetic 176
5 Vitamins 55
IPCA Therapy Sales (|cr)
1 Anti-Infectives 95
2 Cardiac 266
3 GI 120
4 Anti Diabetic 83
5 Vitamins 37
Alembic Therapy Sales (|cr)
1 Anti-Infectives 320
2 Cardiac 219
3 GI 184
4 Anti Diabetic 110
5 Vitamins 113
Unichem Therapy Sales (|cr)
1 Anti-Infectives 150
2 Cardiac 425
3 GI 111
4 Anti Diabetic 59
5 Vitamins 22
Natco Therapy Sales (|cr)
1 Anti-Infectives 401
2 Cardiac 1
3 GI 0
4 Anti Diabetic 0
5 Respiratory 0
Indoco Therapy Sales (|cr)
1 Anti-Infectives 134
2 Cardiac 10
3 GI 109
4 Anti Diabetic 30
5 Vitamins 58
Ajanta Therapy Sales (|cr)
1 Anti-Infectives 15
2 Cardiac 277
3 GI 14
4 Anti Diabetic 15
5 Vitamins 30
Biocon Therapy Sales (|cr)
1 Anti-Infectives 11
2 Cardiac 15
3 GI 3
4 Anti Diabetic 243
5 Vitamins 1
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 7
Exhibit 9: Summary of USFDA approvals for Sep, 2017
[5
Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size
Sun Pharma Fenofibrate Tablets Anti-Cholesterol Abbott Tricor US$ 307 million
Glenmark Pharma Propafenone Hydrochloride Arrhythmia Glaxosmithkline Pharma Rythmol Sr US$ 44 million
Lupin Metronidazole Tablets Anti-Infective Gd Searle Flagyl US$ 69 million
Cadila Healthcare Modafinil Insomnia Cephalon Provigil US$ 149 million
Glenmark Pharma Desonide Dermatology Galderma Labs Desowen US$ 23 million
Cadila Healthcare Donepezil Hydrochloride Cns Eisai Inc. Aricept US$ 52 million
Cadila Healthcare Itraconazole Anti- Fungal Janssen Pharma Sporanox US$ 42 million
Cadila Healthcare Desoximetasone Crèam Dermatology Taro Topicort Lp Emollient US$ 33 million
Glenmark Pharma Nitroglycerin Cvs Pfizer Nitrostat US$ 113 million
Unichem Labs Irbesartan; Hydrochlorothiazide Cvs Sanofi Aventis Avalide NA
Cadila Healthcare Labetalol Hydrochloride Cvs Cnty Line Pharma Trandate NA
Cadila Healthcare Amlodipine And Omlesartan Medoxomil Bloodpressure Daiichi Sankyo Azor US$ 174 million
Lupin Clobetasol Propionate Spray Dermatology Galderma Labs Clobex US$ 14 million
Cadila Healthcare Indomethacin Anti-Inflammatory Iroko Pharma Tivorbex US$ 6 million
Lupin Doxycycline Hyclate Anti-Infective Pfizer Vibra US$ 150 million
Cadila Healthcare Doxycycline Hyclate Anti-Infective Pfizer Vibra US$ 150 million
Ajanta Pharma Rivastigmine Tartrate Cns Novartis Exelon US$ 26.7 million
Dr Reddy'S Sevelamer Carbonate Nephrology Genzyme Renvela US$ 1.9 billion
Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size
Cadila Healthcare Solifenacin Succinate Urology Astellas Pharma Vesicare US$ 1 billion
Cipla Efavirenz;Lamivudine;Tenofovir Disoproxil Fumarate Antivirtal Mylan Telura NA
Cadila Healthcare Pregabalin Tablets Cns Forest Lyrica NA
Aurobindo Lorcaserin Hydrochloride Weight Loss Arena Pharma Belviq NA
Tentative Approvals
ICICI Securities Ltd. | Retail Equity Research
Page 8
Exhibit 10: US patent litigations [5
Month Innovator ANDA Filer Brand Name API Used for
May-17 Takeda Pharma Torrent Pharma Nesina Alogliptin Diabetes
May-17 Takeda Pharma Glenmark Qudexy XR Topiramate Epilepsy
Jun-17 Allergan Taro Pharma Aczone Dapsone Leprosy
Jun-17 Genentech Sun Pharma Tarceva Erlotinib Cancer
Jun-17 Bayer AG Alembic Pharma Xarelto Rivaroxaban Blood Thinner
Jun-17 Teva Dr Reddy's Lab Copaxone Glatiramer Multiple Sclerosis
Jun-17 Valeant Pharma Sun Pharma Uceris Budesonide Ulcerative Colitis
Jun-17 Omeros Corp Lupin Omidria Phenylephrine And Ketorolac Pupil Dilation
Jun-17 Amgen Lupin Sensipar Cinacalcet Calcium Reducer
Jun-17 Biogen Aurobindo Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Sun Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Cipla Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Glenmark Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Lupin Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Forest Laboratories Sun Pharma Linzess Linaclotide Irritable Bowel Syndrome
Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jul-17 Janssen Pharma Aurobindo Pharma Invokana Canagliflozin Diabetes
Jul-17 Actelion Pharma Sun Pharma Veletri Epoprostenol Pulmonary Arterial Hypertension
Jul-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jul-17 Delcor Asset Corp Sun Pharma Evoclin Clindamycin Acne vulgaris
Jul-17 Celgene Corp Dr Reddy's Lab Revlimid Lenalidomide Oncology
Jul-17 PreCision Dermatology Lupin Locoid Hydrocortisone butyrate Dermatitis
Jul-17 BMS Cadila healthcare Reyataz Atazanavir HIV
Jul-17 Endo Pharma Lupin Nascobal Cyanocobalamin Vitamin B12 deficiency
Jul-17 Bayer Sun Pharma Aczone Clindamycin Acne vulgaris
Aug-17 Bayer AG Lupin Xarelto Rivaroxaban Blood Thinner
Aug-17 Horizon Therapeutics Lupin Ravicti Glycerol Phenylbutyrate Inborn Urea Cycle Disorder
Aug-17 Celgene Cipla Revlimid Lenalidomide Oncology
Aug-17 Kissei Pharmaceuticals Aurobindo Rapaflo Silodosin Enlarged Prostate
Aug-17 Bayer AG Torrent Pharma Xarelto Rivaroxaban Blood Thinner
Aug-17 Forest Laboratories Aurobindo Linzess Linaclotide Irritable Bowel Syndrome
Aug-17 Alcon Research Cipla Pazeo Olopatadine Ocular Itching
Aug-17 Sanofi-Aventis Aurobindo Multaq Dronedarone Atrial Fibrillation
Sep-17 Janssen Products LP Aurobindo Prezista Darunavir Hiv
Sep-17 Allergan Aurobindo Lastacaft Alcaftadine Allergic Conjunctivitis
Sep-17 Eli Lilly and Co Glenmark Cialis Tadalafil Erectile Dysfunction
Sep-17 Indivior Dr Reddy's Lab Suboxone Buprenorphine Opioid Dependence
Sep-17 Teijin Ltd Aurobindo Uloric Febuxostat Gout
Sep-17 Takeda Pharma Indoco Remedies Nesina Alogliptin Diabetes
Sep-17 Allergan, Inc Alembic Pharma Latisse Bimatoprost Hypotrichosis
Sep-17 Wyeth Pharma Sun Pharma Bosulif Bosutinib Leukemia
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 9
Monthly sector news
M&As, demergers, tie-ups and JVs
Glenmark loses development, commercialisation rights for Crofelemer
Glenmark Pharma has entered into a termination, asset transfer and
transition agreement with Napo Pharma. The agreement returns to Napo
certain rights, which Napo licensed to Glenmark in 2005 related to the
development and commercialisation of Crofelemer (anti-diarrhoea) for
certain specified human indications in India and 140 other countries largely
in developing regions. Glenmark manufactures Crofelemer for Jaguar and
Napo at its facilities in Ankaleshwar, India, and in Aurangabad, India.
Lupin acquires Symbiomix Therapeutics in US
Lupin has acquired Symbiomix Therapeutics in the US. Symbiomix has one
branded product Solosec (secnidazole), which was approved by USFDA on
September 15, 2017. Solosec (secnidazole) is oral granules, for the
treatment of bacterial vaginosis (BV) in adult women. The acquisition has
been made for a cash consideration of US$150 million including US$50
million upfront and other time-based payments. In addition, there are sales
based contingent payments. The acquisition is funded from internal funds
Price hikes, new launches, recalls, approvals
Dr Reddy’s receives USFDA approval for gRenvela
Dr Reddy’s has received USFDA approval for generic version of Genzyme
Corp’s Renvela 800 mg tablet (Sevelamar Carbonate; nephrology). As per
IMS, the drug had US sales of ~US$1.88 billion. Branded sales of Renvela
800 mg was US$ 800 million. Aurobindo has already launched this drug in
the US.
Lawsuits, court rulings, settlements, regulatory issues
Sun Pharma Dadra plant receives EIR
Sun Pharma’s Dadra Nagar formulation plant has received establishment
inspection report (EIR) from USFDA for closing the Form-483 observation
inspection letter, which was issued by USFDA on April 13, 2017.
Dr Reddy’s plant clears USFDA receives EIR from the USFDA
Dr Reddy's Srikakulam unit II (SEZ) plant has received EIR from the USFDA.
The USFDA had completed the said plant inspection in May with zero form
483 observations.
Dr Reddy’s Miyapur facility clears USFDA inspection
Dr Reddy's custom pharmaceutical services (CPS) facility at its technology
development centre (TDC-1), Miyapur, has completed USFDA inspection
with zero Form 483 observations.
Dr Reddy’s plant receives EIR from USFDA
Dr Reddy’s Srikakulam plant (SEZ) Unit I (Andhra Pradesh) has received an
establishment inspection report (EIR) from USFDA, signalling a successful
plant audit closure.
Biocon’s partner receives CRL from USFDA for pegfilgrastim
Biocon’s partner Mylan received complete response letter (CRL) from
USFDA for a proposed biosimilar pegfilgrastim. This product is a part of the
biosimilars portfolio being developed jointly by Biocon and Mylan. As per
the management, CRL relates to the pending update of the BLA with certain
CMC data from facility requalification activities post recent plant
modifications. The CRL did not raise any questions on biosimilarity,
pharmacokinetic/pharmacodynamic data, clinical data or immunogenicity.
ICICI Securities Ltd. | Retail Equity Research
Page 10
NPPA, DoP proposes changes in price setting method
National Pharmaceutical Pricing Authority (NPPA) and the Department of
Pharmaceuticals (DoP) have proposed and amendment to the four-year-old
Drug Price Control Order (DPCO), which aims to bring non-scheduled drugs
under price control by changing the price setting method. Also, if a
company is launching a new drug that may be a combination of a
scheduled and a non-scheduled drug, the regulator will fix the ceiling price
of the drug.
Others
Aurobindo Pharma enters multilateral deal for ARV treatment
Aurobindo Pharma has entered into a multilateral agreement with
Government of South Africa and Kenya as well as UNAIDS, Bill & Melinda
Gates foundation, etc, to provide a new class of anti-retroviral (ARV)
treatment to low-and middle-income countries. Aurobindo and Mylan Lab
are the two firms that will supply the once-a-day generic fixed-dose
combination of tenofovir disoproxil fumarate, lamivudine and Dolutegravir
(TLD) under this initiative
Amgen delays its launch of its biosimilar version of AbbVie’s Humira
Amgen has reached settlement with Abbvie that will delay the launch of
Amgen’s biosimilar version of AbbVie’s Humira (osteoarthritis) till January
31, 2023. Biocon’s biosimilar version of Humira is currently in global Phase
III clinical trials.
Exhibit 11: One year forward PE
0.0
10.0
20.0
30.0
40.0
50.0
9/21/201
1
3/21/201
2
9/21/201
2
3/21/201
3
9/21/201
3
3/21/201
4
9/21/201
4
3/21/201
5
9/21/201
5
3/21/201
6
9/21/201
6
3/21/201
7
9/21/201
7
x
NSE Pharma Nifty
27% Premium
Source: ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 11
ICICIdirect.com coverage universe (Healthcare)
Company I-Direct CMP TP Rating M Cap
Code (|) (|) (| Cr) FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Ajanta Pharma AJAPHA 1202 1,420 Buy 10590.8 110.0 56.6 51.8 67.1 10.9 21.2 23.2 17.9 46.2 41.8 30.5 31.5 37.3 33.2 24.5 25.3
Alembic Pharma ALEMPHA 500 570 Hold 9431.5 38.2 21.2 19.7 28.8 13.1 23.6 25.4 17.4 52.2 25.3 19.2 23.9 45.1 21.0 16.9 20.8
Apollo Hospitals APOHOS 1071 1,180 Hold 14900.3 13.2 15.9 6.9 19.5 81.1 67.4 155.9 55.0 6.6 6.0 5.8 8.9 5.3 6.0 2.5 6.7
Aurobindo Pharma AURPHA 767 745 Hold 44937.2 33.9 38.8 46.1 40.6 22.6 19.8 16.6 18.9 23.1 24.4 25.2 19.3 27.2 24.2 22.7 16.8
Biocon BIOCON 385 380 Hold 23124.0 7.7 11.0 7.6 13.6 50.0 35.1 50.5 28.3 9.3 11.9 10.0 16.0 11.5 13.6 8.8 14.0
Cadila Healthcare CADHEA 498 440 Hold 50987.5 15.0 14.5 19.4 22.8 33.3 34.2 25.7 21.9 24.9 13.1 17.3 19.8 34.4 21.4 23.5 22.9
Cipla CIPLA 613 525 Hold 49391.6 18.5 12.5 21.6 26.1 33.2 48.9 28.3 23.5 11.8 7.7 12.6 14.2 12.9 8.0 12.5 13.4
Divi's Lab DIVLAB 875 665 Hold 23232.5 41.5 39.3 34.9 41.5 21.1 22.3 25.1 21.1 31.0 25.0 20.4 21.4 25.7 19.5 15.5 16.3
Dr Reddy's Labs DRREDD 2388 2,400 Hold 39587.8 141.4 70.6 70.2 125.0 16.9 33.8 34.0 19.1 15.3 6.1 6.6 11.9 19.2 9.5 8.8 13.8
Glenmark Pharma GLEPHA 612 730 Hold 17294.1 32.2 46.0 40.7 40.3 19.0 13.3 15.1 15.2 16.2 18.9 16.5 15.4 21.2 25.5 18.6 15.7
Indoco Remedies INDREM 250 180 Hold 2303.8 9.4 8.4 5.4 12.2 26.7 29.9 46.4 20.5 12.9 8.4 6.0 12.1 14.8 12.0 7.3 14.6
Ipca Laboratories IPCLAB 499 410 Hold 6283.4 7.4 15.4 12.4 25.5 67.6 32.4 40.2 19.5 4.5 8.7 6.9 12.5 4.1 7.9 6.1 11.3
Jubilant Life JUBLIF 643 845 Buy 10236.2 26.0 36.1 46.9 58.4 24.7 17.8 13.7 11.0 12.0 13.3 15.4 17.4 14.2 16.8 18.1 18.6
Lupin LUPIN 1066 1,070 Hold 48193.2 50.4 56.6 40.4 52.6 21.2 18.8 26.4 20.3 17.8 16.6 12.2 15.3 20.3 18.9 12.2 14.0
Natco Pharma NATPHA 989 1,065 Buy 17239.0 9.0 27.0 26.4 15.8 109.4 36.6 37.5 62.4 16.0 33.0 28.1 16.0 12.2 28.8 23.2 12.6
Sun Pharma SUNPHA 548 445 Hold 131898.6 23.4 29.0 14.5 20.0 23.4 18.9 37.8 27.4 18.6 19.8 9.7 12.3 18.0 19.0 9.0 11.2
Syngene Int. SYNINT 494 490 Hold 9871.0 11.1 14.3 14.3 17.4 43.9 33.9 33.9 27.9 14.1 16.8 16.2 17.8 21.6 20.3 17.2 17.4
Torrent Pharma TORPHA 1315 1,260 Hold 22264.7 110.9 55.2 48.9 66.2 11.9 23.8 26.9 19.9 46.5 18.9 17.8 20.8 53.7 21.5 16.7 19.3
Unichem Lab UNILAB 254 235 Hold 2312.1 12.3 12.0 12.5 19.4 20.6 21.2 20.3 13.1 13.8 11.8 11.0 15.6 11.7 10.2 9.8 13.4
RoE (%)EPS (|) PE(x) RoCE (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 12
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notional target price is defined as the analysts' valuation for a stock.
Sector view:
Over weight compared to index
Equal weight compared to index
Under weight compared to index
Index here refers to BSE 500
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