Bird s Eye View of Indian Pharma

Transcription

1 Bird s Eye View of Indian Pharma

2 Classification of Pharma Industry Pharma industry Formulations Active Pharmaceuticals Ingredients Branded Generics Bulk drugs Pfizer Abbott GSK BMS Teva Mylan Dr Reddy Ranbaxy Dishman Divis Lab Shasun

3 Size & Growth of the Industry 2,500 2,000 1,500 1, FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11e FY12e FY13e FY14e FY15e Domestic Market (in Rs Bn) Export Imports Source: Department of Pharmaceutical Ministry (GOI), Pharmexcil, IndiaNivesh Research India ranks 3 rd in terms of drugs volume production (10% of global share) & 14 th largest by value ~$24.8 billion (3% of global size of ~$810 billion). Exports have 18.7% to $ 9 billion & Domestic market has 13.5% CAGR to $13.8 billion during FY05 to FY10.

4 Global Pharma market: Global Pharma Market (in 2010): $308 bn $810 bn Source: IndiaNivesh Research US Generics Market US Pharma Market Global Pharma Merket Global Generic Drug market Size ($bn): e Source: Teva, IndiaNivesh Research

5 Global generic market: Regional Share of Global Generic Market : India s pharma exports to major regions: Source: Sun Pharma, IndiaNivesh Research Source: Pharmexcil, IndiaNivesh Research

6 India s Exports Drivers: Patent expiry of major drugs: ANDAs Approvals by India: e 2013e 2014e 2015e Drugs likely to go Off-patent globally ($ bn): Source: Industry Source: US FDA India has received ~1/3 rd ANDA approval of total ANDA approved by USFDA in the last 3 year. Further, India contributes ~27% of total DMF filings with USFDA. Indian companies are expanding their wings to new geographies including Japan, Africa & many other emerging countries.

7 Domestic Market: Increasing income level would lead to high expenditure on health Increasing government expenditure on health. Increasing health penetration Improved healthcare infrastructure Highly fragmented & competitive industry, largest player has market size of ~7% of total market. Domestic pharmaceutical industry is expected to clock 14-15% CAGR to reach at $25 billion in FY15E. Chronic therapies (contributes 35-40%) viz, ant diabetic, cardiac CNS are growing/likely to grow at higher rate than acute therapies.

8 Therapeutic Classification: Pharma industry Chronic (35%) Acute (65%) Antidiabeties CNS CVS Antibiotics Gastro Pain killers

9 Sensex V/s Healthcare index: Jan-08 1-Mar-08 1-May-08 1-Jul-08 1-Sep-08 1-Nov-08 1-Jan-09 1-Mar-09 1-May-09 1-Jul-09 1-Sep-09 1-Nov-09 1-Jan-10 1-Mar-10 1-May-10 1-Jul-10 1-Sep-10 1-Nov-10 1-Jan-11 1-Mar-11 1-May-11 1-Jul-11 1-Sep-11 1-Nov-11 1-Jan-12 1-Mar-12 1-May-12 1-Jul-12 1-Sep-12 1-Nov-12 Healthcare Sensex

10 Sector Outlook: Domestic formulation business is likely to witness revenue CAGR of 13-15% for next 2-3 years mainly lead by chroninc therapies. Increase in affordability, infrastructure & insurance penetration are the key drivers. Regulatory approvals, ramp up in new manufacturing facilities & improvement in productivity would improve efficiencies, however increasing fuel cost may impact certain companies in short term. GDUFA fee, dues for ANDA back logs in Q3FY13E may have one time negative impact on the margins. Going forward this would improve ANDA approval efficiency. ~ $50 billion worth of drugs are likely to go off-patent in next 5 years in US market & more than 600 pending ANDAs from Indian Pharma companies would drive the revenue in the region. Increasing cost efficient pressure on MNC s would drive Contract Research & Manufacturing Services (CRAMS) & API businesses. Strategic deals & formation of JVs with Pharma majors would help in expanding wings for Indian companies. We are of the view that overall industry may take a gentle pause in FY14 before resuming at high trajectory in FY15-16 onwards on the back of bio-similars approval in US market. Industry is likely to transform from simple generic players to complex molecules research driven in the next few years.

11 Valuations & Recommendation: Company's Name Market Cap (Rs Mn) Sales (Rs Mn) PE PEG M Cap/Sales ROE(%) FY14E FY14E FY14E FY14E FY14E x EBITDA Margin (%) Net D/E CMP (Rs) Target Price Reco Ajanta Pharma 8,587 10, BUY Aurobindo Pharma 50,925 65, BUY Alembic Pharma 12,253 19, ACCUMULAT E Biocon 55,788 28, (0.1) HOLD *Cadila 162,973 94, BUY *Cipla 307,511 92, BUY Divis Lab 155,211 28, (0.3) 1,167 1,250 HOLD Dr Reddy 295, , ,734 1,983 BUY Glenmark 115,446 57, BUY *#Ranbaxy 217, , UR Neutral Dishman 9,281 14, BUY Shasun Pharma 8,659 14, BUY #Strides Arcolab 55,130 26, HOLD Lupin 251, , HOLD *Sun Pharma 712, , (18.2) HOLD Ipca Lab 52,857 32, BUY Torrent 55,088 38, (1.5) 651 UR HOLD

12 Thank You DISCLAIMER: This document has been prepared by IndiaNivesh Securities Private Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the stocks mentioned in the report. IndiaNivesh directors and its clients may have holdings in the stocks mentioned in the report.