Pharmaceuticals & Biotech. share price target

In Q1FY24, the Indian Pharma Market (IPM) experienced a 10.7% YoY sales growth, primarily due to a 16.0% increase in realization, whereas volume declined by 13.9%. The growth from new product launches was approximately 8.6% compared to the same quarter last year. IPM witnessed growth across various therapy areas during Q1FY24.

Pharma - Q1FY24 - Earnings Preview

Pharma companies under our coverage are likely to report revenue/EBITDA/PAT growth of 15%/33%/28% YoY in Q1FY24E. The growth is likely to be led by new launches, market share expansion in key products and acquisition in US & India.

In Q4FY23, companies under our coverage delivered 14%/26%/16% YoY increase in revenue/EBITDA/PAT, respectively. Growth was led by better traction across India and US which also supported 214bps improvement in gross margin.

Indian Pharma Market (IPM) reported 11.9% YoY growth in sales in Q4FY23, as expected, driven by 3.5% and 5.8% YoY growth in volumes and realisation respectively. While growth from the new product launches was around 2.5% YoY.

IPM grew 6.7% YoY in Feb'23 (MAT) led by gastro, cardiac and pain therapies; anti-infectives, respiratory and VMN sales lagged the market

The pharmaceutical industry is a defensive sector, one that is expected to perform well even during market turmoil. Spending above a certain level remains steady, since a person’s health and medical care remains a priority irrespective of macroeconomic factors. As a result, drug makers have a beta considerably lower than 1 – their stock prices are less volatile than the overall market.

We expect pharma and healthcare companies under our coverage to report modest growth in Q3FY23, supported by healthy domestic performance. Raw material and freight costs are expected to taper down slightly but still remain at elevated levels viz-a-viz pre-covid level.