Pharmaceuticals & Biotech. share price target

The scheme had an outlay of Rs450bn in FY20. With export incentives a major source of other operating income for India generic majors, GOI's decision to cap export benefit of Rs20m under Merchant Export from India Scheme (MEIS) will impact 2-3% of earnings estimates from our pharmaceutical coverage universe. If withdrawal of the incentive scheme remains permanent, it would impact gross margin of high export-oriented companies such as Divis Lab, Dishman Pharma, Biocon, Strides Pharma, Jubilant Life, IPCA, Dr.Reddy's, Lupin, Aurobindo,Cipla and...

IPM growth has been very volatile during lockdown (April-July), despite no restriction imposed on the industry. Anti-Infective continued to be most impacted, while Cardiac was an outlier showing healthy growth in every lockdown month. 1QFY21 sales of domestic formulation were negative for most companies, and real growth was only reported by ERIS and IPCA. Early trends and management comments indicate 2QFY21 domestic formulation sales could be negative as MRs continue to be off-field and vector borne disease cases have also been on lower side. The biggest beneficiaries for...

New class of HIV treatment could end the road for Indian players. We raise red flag over Indian drug suppliers who are exposed to Global Fund and sovereign Institutional tender business as the spread of Covid-19 could divert global attention away from serious diseases (Malaria, TB, and AIDS) and the new class of HIV treatment could end the road for Indian ARV (Antiretroviral) suppliers. The immediate threat to Indian suppliers because of Corona virus (SARS-nCOV2) will be felt in near to medium term as 1) COVID has disrupted 85% Global Funds activities for HIV, TB and malaria...

New launches take a back-seat due to lockdown. With an exception to Anti-Infective and Pain many other leading therapies grew in the June month resulting in IPM growth of 2.4%, after two months of consecutive decline. During the lockdown (April-June) phase, Cardiac and Anti-Diabetic were only two therapies that reported growth of 8.4% and 5.5% v/s IPM decline of 5.9%. The biggest beneficiaries here were Torrent pharma (7.4% Rx share in Cardiac), Lupin (9% and 7% Rx share in Anti-diabetic and Cardiac) and ERIS Life (56% of total revenue from Anti-Diabetic and Cardiac)....

New launches take a back-seat due to lockdown. With an exception to Anti-Infective and Pain many other leading therapies grew in the June month resulting in IPM growth of 2.4%, after two months of consecutive decline. During the lockdown (April-June) phase, Cardiac and Anti-Diabetic were only two therapies that reported growth of 8.4% and 5.5% v/s IPM decline of 5.9%. The biggest beneficiaries here were Torrent pharma (7.4% Rx share in Cardiac), Lupin (9% and 7% Rx share in Anti-diabetic and Cardiac) and ERIS Life (56% of total revenue from Anti-Diabetic and Cardiac)....

Q4FY20: Stock-up and adequate inventory in the supply chain holds revenue for domestic and export market. We believe Q1FY21E revenue growth to be 5% YoY while EBITDA and PAT to decline 4% and 15% YoY for our coverage universe assuming 1) domestic players with chronic heavy business model to be not impacted much due to lockdown led restrictions. 2) US (Gx) sales decline of 5% QoQ (3% volume and 2% price erosion) due to delay in shipping consignments, lower new Rx and delayed surgeries 3) major European Countries Rx retail volumes...

Q4FY20: Stock-up and adequate inventory in the supply chain holds revenue for domestic and export market. We believe Q1FY21E revenue growth to be 5% YoY while EBITDA and PAT to decline 4% and 15% YoY for our coverage universe assuming 1) domestic players with chronic heavy business model to be not impacted much due to lockdown led restrictions. 2) US (Gx) sales decline of 5% QoQ (3% volume and 2% price erosion) due to delay in shipping consignments, lower new Rx and delayed surgeries 3) major European Countries Rx retail volumes...

The covid-19 pandemic has taken a toll on various sectors, but the pharmaceutical industry is the only one to buck the trend...

On the business front, despite the nationwide lockdown, domestic growth is expected to remain more or less stable. Exports growth, barring for one or two months due to congestion in all major ports globally, is also expected to remain strong due to 1) currency benefit, 2) slowdown in competition due to delay in new approvals that will be beneficial for existing players and 3) expected demand continuum across the world despite Covid-19. Some windfall is also expected in some critical productsa case in point is Hydroxychloroquine, a malaria drug that is likely to be repurposed as a prophylaxis for Covid-19 treatment in some cases....