Pharma Pill
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ICICI Securities Limited
Monthly Update
Index Performance as on 31 January 2011
Return (%) 1Months Nifty Sensex BSE Healthcare -10.3 -10.6 -7.4 3Months -10.0 -9.9 -4.9 6Months 1.2 1.2 10.9 1Year 12.4 12.1 27.6
February 4, 2011
Pharma Pill
Summary January saw majority of pharma companies declaring Q3FY11 results. While most companies registered sound sales growth YoY, EBITDA margins for most of them remained under pressure. This was mainly on account of adverse currency fluctuation as well as a rise in staff and R&D costs. Cost pressure was somewhat severe for smaller players like Unichem, Ipca and Torrent. In terms of sales, while companies like Sun and Opto saw robust growth on account of inorganic growth, majority of big players like Glenmark, Lupin, Cadila, Sun and smaller players like Torrent and surprisingly Alembic registered good growth in domestic formulations, which normally are subdued in Q3. On the US generic front, Lupin and Glenmark were negative surprises but these players registered robust growth in the ex-US markets. Thus, they made good the US slowdown. However, companies having a German presence like Dr Reddy’s and Biocon continued to bleed in that market on account of the 16% rebate proposed by the government for three years. On the regulatory front, there were eight final approvals and four tentative approvals from the USFDA. Aurobindo and Dr Reddy’s Laboratories have received tentative approvals for two drugs each. Other companies like Alembic, Glenmark Pharma, Lupin, Natco, Torrent and Dr Reddy’s received final approval for one drug each while Cadila Healthcare got the nod for two drugs. In a first of its kind of compulsory licensing challenge, Natco Pharma has sought licensing from Pfizer and Bayer to launch their patented products for HIV and cancer, respectively, under the cover of compulsory licensing. On the R&D front, we saw 122.170.126.130 ondiscouraging results for its diabetic drug in phase III Biocon reporting 2011-02-17 04:09:50 EST. DownloadPDF. trials. During the month, Cadila formed a new JV with Bayer Healthcare to market its products from niche categories. Glenmark received an unfavourable verdict from a US jury regarding anti-hypertensive drug Tarka, which asked the company to stop sales of Tarka and also slapped a | 70-crore penalty to be payable to Abbott. During the month, the Indian patent office denied patent protection to Abbott’s HIV drug Kaletra and allowed the generic sale of this product by Cipla and Matrix.
Regulatory approvals
Stocks Performance
Return (%) Company Sun Pharma Dr Reddy's Labs Cipla Ranbaxy Labs Glaxosmit Pharma Lupin Cadila Health. Piramal Health Divi's Lab. Glenmark Pharma. Biocon Aurobindo Pharma Torrent Pharma. Opto Circuits Ipca Labs. Jubilant Life Strides Arcolab Orchid Chemicals FDC 1month 3month 6month 1year -9 -4 -10 -7 -2 -11 7 -6 -2 -13 -16 -9 1 -5 -10 -19 -7 1 -9 5 -2 -6 -6 2 -3 18 -8 -8 -10 -15 1 5 -13 -7 -28 -1 3 -3 24 20 2 22 13 13 30 -9 -15 14 13 22 3 -9 8 -37 30 58 17 50 45 5 21 50 49 73 20 6 27 30 48 31 17 35 -25 110 85 41 Mcap 31-Jan 45629 27489 26676 22976 19304 18852 16862 9189 8433 8288 6998 6910 4913 4574 3789 3580 2393 2071 1882
Unichem Labs. -17 -12 15 46 ISIEmergingMarketsPDF in-nmimsmum 1796 from Dishman Pharma. -13 -27 -39 -39 1077 J B Chem & Pharm Alembic Natco Pharma Elder Pharma Indoco Remedies Mcap in | crore -17 2 -10 1 -10 -3 -8 4 -6 -12 20 19 43 15 8 94 52 149 25 36 993 914 789 767 543
Price movement
8000 7000 6000 5000 4000 3000 2000 1000 0 Aug-10 Jun-10 Oct-10 Dec-10 Feb-10 Apr-10 25000 20000 15000 10000 5000 0
Aurobindo gets USFDA nod for two drugs Aurobindo Pharma has received tentative approval from the USFDA to manufacture and market Levofloxacin tablets of 250 mg, 500 mg, 750 mg. Levofloxacin tablets are indicated for the treatment of adults with mild, moderate and severe infections caused by susceptible strains of the designated micro organisms such as pneumonia, bacterial sinusitis, etc. The product has a market size of nearly US$1.45 billion for the 12 months ending September 2010 according to IMS. It received tentative approval from the USFDA to manufacture and market Famciclovir tablets of 125 mg, 250 mg and 500 mg. Famciclovir Tablets 125 mg, 250 mg and 500 mg are the generic versions of Novartis Pharmaceuticals Corp’s Famvir Tablets of 125 mg, 250 mg and 500 mg. It is indicated for the treatment of recurrent mucocutaneous herpes simplex infections in HIV-infected patients and suppression of recurrent genital herpes in immuno-competent patients. The product has a market
BSE Healthcare
Sensex
Analyst’s name
Siddhant Khandekar [email protected] Krishna Kiran Konduri [email protected]
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size of approximately US$170 million for the 12 months ending September 2010 according to IMS. Cadila Healthcare receives approval for hypertension drug Cadila Healthcare's US arm has got tentative approval from the USFDA for hypertension drug Irbesartan tablets. The company has got approvals for tablets of 75 mg, 150 mg and 300 mg strengths. The patent for the drug will expire in March 2012. Currently, the drug is marketed by BristolMyers Squibb and Sanofi-Aventis under different brand names with annual sales of $1.3 billion and $2.1 billion, respectively. USFDA grants marketing approval for Glenmark’s anti-malarial drug Glenmark Generics, the US subsidiary of Glenmark Pharmaceuticals received final approval from the USFDA for abbreviated new drug application (ANDA) for the generic version of Atovaquone & Proguanil Hydrochloride tablets in the strengths of 250 mg and 100 mg. GlaxoSmithKline (GSK) originally developed it and markets this product as Malarone in the US, which is indicated for the prevention and treatment of malaria. The patent is set to expire in 2014. The total US sales as reported by IMS Health for the 12 month period ending December 2009 were approximately US$ 64 million. Glenmark Generic is the first to file ANDA for the product. Interestingly, in April 2010 it made an out-of-court settlement with GSK over an earlier lawsuit filed in a US court. According to the terms of settlements agreement, which are still subject to review by the Federal Trade Commission and Department of Justice, Glenmark will be able to sell its generic tablets under a royaltybearing licence from GSK from the third quarter of 2011, or earlier under certain circumstances.
Glenmark plans to launch Malarone in Q2FY12
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Lupin Pharmaceuticals, Inc (subsidiary of Lupin) has been granted final approval for its Nabumetone tablets, 500 mg and 750 mg strengths from the US Food and Drug Administration. Lupin’s Nabumetone is the ABrated generic equivalent of GlaxoSmithKline’s Relafen tablets indicated for acute and chronic treatment of the signs and symptom of osteoarthritis and rheumatoid arthritis. Annual sales for the Nabumetone market in the US was $66.8 million for the 12 months ended September 2010, based on I Health sales data. Strides gets USFDA approval for anti-inflammatory injection Strides Arcolab received an approval from the USFDA for an additional package size of anti-inflammatory adenosine injection, USP, 3 mg/MI packaged in 12 mg/4 ml single-dose vials. The product will be launched upon expiry of applicable innovator patents. The US innovator market for Adenosine presentations is approximately US$94 million. Strides had in 2010 received approval for Adenosine Injection 60 mg per 20 ml and 90 mg per 30 ml vials. The product will be launched under the partnership between Strides and Sagent Pharmaceuticals wherein Strides is developing and supplying more than 25 injectable products for the US market, which is marketed by Sagent.
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Exhibit 1: Summary of USFDA approvals
Company Alembic Dr Reddy's Labs Glenmark Pharma Lupin Natco Pharma Torrent Pharma Strides Arcolab Cadila Healthcare Cadila Healthcare Company Aurobindo Pharma Aurobindo Pharma Dr Reddy's Labs Dr Reddy's Labs Drug Name Lamotrigine tablets Pantoprazole Sodium tablets Atovaquone and Proguanil Hydrochloride tablets Nabumetone Tablet Chloroquine Phosphate tablet Pantoprazole Sodium tablets Adenosine injection Glipizide; Metformin Hydrochloride tablet Tramadol Hydrochloride tablet Drug Name Levofloxacin tablets Famciclovir tablets Sumatriptan; Naproxen Sodium tablet Clopidogrel tablets Final Approvals Therapeutic Area Central Nervous System Anti-Ulcerant Anti-Malarial Anti-inflammatory Anti-Malarial Anti-Ulcerant Anti-inflammatory Anti-diabetic Pain Management Tentative Approvals Therapeutic Area Anti-infective Anti-retroviral Anti-inflammatory Anti-clotting Innovator company GlaxoSmithKline Pharma Hospira GlaxoSmithKline Pharma GlaxoSmithKline Pharma Sanofi Aventis Hospira Astellas Bristol Myers Squibb Ortho McNeil Janseen Pharma Innovator company Ortho McNeil Janseen Pharma Novartis Pharmaceuticals GlaxoSmithKline Pharma Sanofi Aventis Generic Version of Lamicta; Protonix Malarone Relafen Aralen Protonix Adenocard Metaglip Ultram Generic Version of Levaquin Famvir Treximet Plavix Market Size US$ 452 million US$ 1.8 billion US 64 million US$ 66.8 million NA US$ 1.8 billion US$ 94 million US$ 30 milliom NA Market Size US$1.45 billion US$ 170 million NA US$ 200 million
Source: Company, ICICIdirect.com Research
Financial Performance
Alembic’s profit grows 127% YoY
Total 20% growth in the domestic formulation business drives the growth in overall sales
Alembic reported a 23% increase in revenues to | 373.79 crore for the quarter ended December 31, 2010. The company posted 127% growth in net profit at | 30.84 crore. Domestic formulations grew ~20% YoY to | 184.24 crore above industry growth rate of ~17%. Biocon sales up 15% YoY
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Biocon has registered a net profit of | 101 crore in the third quarter of the current financial year, a rise of 24% YoY. Total income rose 15% to | 738 crore and its operating profit saw a rise of 34% to | 178 crore during the same period. The sales growth was driven by biopharmaceuticals and CRAMS nullifying de-growth from the German subsidiary Axicorp. Sales from Axicorp will go down from Q4 as the German government mandated a 16% rebate on all pharma drugs. Cadila Healthcare net profit at | 162 crore Cadila Healthcare registered a total income of | 1170 crore in Q3FY11, up 18% YoY on a consolidated basis. EBITDA was up 22% YoY to | 256 crore. Net profit stood at | 162 crore, up 25% YoY. The income growth was mainly driven by a growth of 20% in formulations exports and a growth of 17% in domestic formulations. The company’s consumer wellness business was up 21%. Dr Reddy’s posts profit, but numbers disappoint Dr Reddy's Laboratories swung to profit for the quarter ended December 2010. Its third quarter net profit rose to | 273.2 crore against a net loss of | 521.7 crore in the same quarter previous year. The company recorded a 9.7% increase in revenues to | 1898.5 crore, on account of a growth in sales of the generic segment, especially in the US. During the quarter, the company launched 42 generic products and filed 21 new product registrations globally. It entered into two settlement agreements with AstraZeneca in the US related to abbreviated new drug application filed for generic versions of Nexium (esomeprazole) and Accolate (zafirlukast).
Higher litigation cost drags overall margins
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The company's profit, however, was below expectations due to higher selling, general and administration (SG&A) expenses including litigation costs in the US. The German market continued to be a drag on its sales. Speciality business drives Glenmark sales Glenmark's consolidated net sales moved up by 17% to | 751 crore for Q3FY11. There was, however, some pressure on the EBITDA margin on account of lower realisations and inventory adjustments. Margins declined by ~330 bps. Consolidated net profit went up 16.5% to | 109.56 crore. The company's speciality business registered a growth of 25% to | 452.06 crore. Its speciality business in India saw a growth of 30% to | 239 crore while that in the rest of the world grew 27%t to | 115 crore. The Latin American business increased by 88% to | 52.83 crore and in Europe it clocked a growth of 27% to | 44.77 crore. The generic sales, however, recorded tepid growth of 7% and touched | 298.8 crore mainly due to subdued growth in the US, which grew just 8% to | 204.1 crore. This was attributable to the discontinuation of the cardiovascular drug nitroglycerine and a slower ramp-up of generic products for which it has approval. Indoco Remedies net profit up 14% Indoco's Q3FY11 sales increased 19.4% to | 114.3 crore mainly driven by the growth in formulation exports and domestic API business. However, at the EBITDA level, margins were subdued at 12.7% due to a change in the product mix, increase in raw materials cost and fall in realisation due to currency fluctuation. Increase in the taxation YoY restricted the net profit growth to 14% to | 8.8 crore. The company expects the domestic formulation business to be normalised in due course. It also expects a couple of product launches in semi-regulated markets in Q4FY11. Ipca’s EBITDA margins plunge 330 bps Ipca's Q3FY11 sales increased 18% YoY to | 466.4 crore backed by 33% rise in the export formulation business and almost 17% growth in domestic branded formulations. EBITDA margins declined ~330 bps YoY as sales & marketing expenses and expenses related to newly joined employees went up. Net profit increased 10% to | 63.9 crore. The export formulations segment is likely to continue its growth momentum, going forward. Incremental sales from newly added medical representatives will also support growth in sales from H2FY12E onwards. However, EBITDA margins will continue to be under pressure for at least two or three quarters. Lupin’s sales increase by 16.9% YoY in-spite of US slow down Lupin’s net sales grew 16.9% YoY to | 1467.2 crore for Q3FY11 backed by formulations sales growth in the US, Europe and Japan. EBITDA margins declined 90 bps to 19.7%. This was on the back of an increase in R&D cost, forex loss of | 17 crore and rise in employee expenses due to new recruitment at the Indore SEZ and also due to addition of ~160 medical representatives. However, net profit was up 39.5% to | 224.1 crore on the back of lower tax provision.
Absence of sales from Nitroglycerine leads to lower growth in US business sales
Indoco will launch a couple of products in semi-regulated markets in Q4FY11
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Increase in employees cost and cost related to new employee’s dragged overall margins
Forex loss and higher R&D cost dragged margins
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Opto’s like to like sales up by 37% Opto Circuits has posted a net profit after minority interest of | 95.67 crore for the quarter ended December 31, 2010 as compared to | 65.68 crore for the quarter ended December 31, 2009, a rise of 45.67%. Total income has increased 70.59% to | 428.12 crore. The numbers are not comparable as the company acquired majority stake in US based Cardiac Science in December. On a like-to-like basis sales grew ~37% YoY. Sun Pharma reported muted net profit growth of 3% YoY Sun Pharma reported ~57% growth in net sales to | 1603 crore driven by consolidation of Israel-based Taro Pharma’s accounts. Taro clocked ~| 459 crore sales during the quarter. Without Taro, on a like to like basis the sales growth was just ~11%. This was mainly on account of higher base of Q3FY10 on account of sales from anti-ulcerant Protonix, which it stopped in the current fiscal due to litigation issues. Due to this consolidation, EBIDTA margins declined by ~660 bps and PAT also grew by just ~3% YoY to | 350 crore. Another US subsidiary Caraco reported ~20% de-growth in sales to | 180 crore on account of continuance of production stoppage due to USFDA related issues. The company does not expect the restart of production in Q4FY11. Sales from Indian branded formulations grew 20% to | 640 crore driven by nine product launches and further consolidation in at least six therapeutic categories where Sun is the market leader. Torrent Pharma profit dips 7.28% YoY Torrent Pharmaceuticals’ consolidated net profit declined 7.28% YoY to | 76.91 crore for the third quarter ended December 31, 2010. Profits were affected due to planned expansions in domestic and international 122.170.126.130 on 2011-02-17 04:09:50 EST. The Q3 sales stood at | 565 markets and adverse currency movements. DownloadPDF. crore, up 20%, on the back of robust growth in the domestic formulation business and continued buoyancy in the international business. During Q3, domestic formulation business recorded sales of | 214 crore, growing 17%. Sales outside India jumped 19% to | 292 crore. Operations in Brazil registered an impressive performance with sales growth of 15% to | 102 crore. Germany-based Heumann’s operations recorded sales of | 76 crore with growth of 15%. Europe (other than Heumann), Russia & CIS and rest of the world operations grew 22% with sales of | 78 crore. Unichem’s net profit declines 24% YoY Unichem Laboratories’ net profit decreased ~24% to | 25.60 crore for the third quarter ended December 2010. The decrease in profits was essentially on account of increased investments in existing and new marketing divisions and consequent payroll costs, higher manufacturing costs and depreciation due to commissioning of new plants. Total income grew 14% YoY to | 197 crore.
IP Issues
Excluding sales from Taro, the base business was up just ~ 11%
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Export sales witnessed a growth of 19% YoY
Commission of new facilities hits EBITDA margins
Takeda Pharma sues Cadila Healthcare on Actos Takeda Pharmaceuticals has filed a suit against Cadila Healthcare at a US district court alleging that the latter would be infringing the former's patent coverage by attempting to manufacture and market diabetes drug Actos (pioglitazone hydrochloride) in the US market. Actos, which is used to improve glycemic control in type-II diabetes patients, is a
Takeda resolved patent litigation with various generic customers over the same drug
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blockbuster drug that clocked revenues worth $3.4 billion only in the US market for the year ending December 31, 2009, according to data of market research firm IMS. The product is among the largest selling diabetic drugs globally and the eighth largest selling prescription drug in any therapeutic segment in the US market. Takeda has already resolved patent litigation with eleven generic companies chasing the diabetes drug opportunity in the US market early this year. India’s patent office denies Abbott’s Kaletra India’s patent office has denied protection to Abbott Laboratories’ AIDS drug Kaletra allowing generic drug makers to continue selling their own versions of the drug. The patent office said that the steps involved in making Kaletra do not constitute an invention. The initiative for medicines, access & knowledge, as well as Cipla and Matrix had challenged Abbott’s patent application. Abbott is reviewing the decision and weighing its options. Kaletra is a combination of two anti-virals. The product generated about $1.4 billion in sales in 2009, making it Abbott’s second-best seller after the arthritis drug Humira. Pfizer sues Dr Reddy’s over generic Lipitor Pfizer Inc. has taken Dr Reddy's Laboratories to court in an effort to delay the launch of the Indian company's low-cost version of atorvastatin in the US. In a filing before a local court in Delaware, Pfizer has said Dr Reddy's plans to launch atorvastatin, a generic version of its anti-cholesterol medicine Lipitor, will infringe upon its patent. Lipitor gets about $12 billion in annual sales for Pfizer globally. Dr Reddy’s gets favourable decision for generic Allegra D24
ISIEmergingMarketsPDF in-nmimsmum from 122.170.126.130 on 2011-02-17announced thatDownloadPDF. Dr Reddy’s Laboratories has 04:09:50 EST. a US District
Abbott’s second best seller drug patent was denied by the Indian Patent Office
Court of New Jersey has filed a stipulation and order lifting an earlier motion for preliminary injunction and clearing the sale of Dr Reddy’s generic product version of Allegra D24 (fexofenadine hydrochloride/pseudoephedrine hydrochloride 180 mg/240 mg extended release tablet), which was approved by the FDA on March 16, 2010. In addition, plaintiffs’ Sanofi Aventis and Albany Molecular Research have been required to post a security with the court, an amount of US$40 million towards the possibility that the injunction had been wrongfully granted. Having been excluded from launching the generic product since the June 2010 hearing, Dr Reddy’s intends to pursue an award of this security. Federal jury suggests Glenmark to stop supplying of generic Tarka Sanofi Aventis SA and Abbott Laboratories won a US jury trial in which the drug makers sought to halt Glenmark’s sales of a generic version of their hypertension medicine Tarka. Abbott was awarded US$16 million in damages. A federal jury in Newark, New Jersey rejected Glenmark’s challenge to the validity of a Sanofi patent that expires in February 2015. Glenmark argued that the patent covered an invention that was protected by an expired patent. Abbott, which paid US$290 million for an exclusive license to Tarka, was seeking US$25 million as compensation for profit it lost because of Glenmark’s sale of the generic drug. Sanofi owns the patent on Tarka, first approved by drug regulators in 1996. The company is now awaiting a verdict from the judge at the US court in the coming days. The judge's ruling, which can be different from that of the jury's, will, therefore, holds the key.
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Lupin settles patent litigation with Dainippon Sumitobo Pharma Lupin and its subsidiary Lupin Pharmaceuticals Inc have settled all litigation with Dainippon Sumitobo Pharma Co arm Sunovion Pharmaceuticals Inc over Lunesta Eszopiclone tablets. Lupin said the settlement entitled the company to sell its generic version of Lunesta under a license from November 30, 2013. Sales of Lunesta, which is used to treat insomnia (Sleeping disorder), in US in the 12 months ended September 2010, were at $787 million. Natco Pharma seeks voluntary licenses for Pfizer’s HIV drug and Bayer’s Cancer drug Natco Pharma has sought a voluntary licence from Pfizer to make and sell copies of its HIV medicine in India, a first step to a provision that permits firms to legally make patented drugs of other companies. Natco sent a notice to Pfizer in November saying Pfizer's drug was too expensive for HIV patients in India, and that Natco can sell its own product at about one-fifth the price. This is the first step in what is known in pharma industry as compulsory licensing (CL), a provision that allows generic drug makers to make and sell low-cost version of a patented drug under certain conditions. Pfizer has time till May to reply. Pfizer's HIV drug maraviroc sold under the brand Celsentri, costs about | 65,000 for a month dosage, said Natco in its notice to the world's largest drugmaker. The Indian company has said it can make a copy that will cost | 15,000 a month to HIV patients. Natco plans to seek a compulsory licence from the government to make Bayer AG's Nexavar (a cancer drug) in India, invoking a provision in local 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF.patented drugs laws that allow generic drugmakers to make and sell cheaply if the medicine is unaffordable. Bayer last month rejected Natco's plea to seek a voluntary licence to make the drug in the country. Nexavar's dosage for a month costs | 2.8 lakh while Natco says it can sell its brand at less than | 10,000. India has an estimated 5 lakh cancer patients. Bayer sues Sun Pharma for generic oral contraceptive YAZ drug German pharma major Bayer AG has filed patent infringement lawsuits against Sun Pharma in the US, following a Paragraph IV certification, as part of the latter's Abbreviated New Dug Application (ANDA) to manufacture a generic version of oral contraceptive YAZ (drospirenone 3 mg + ethinyl estradiol 0.3 mg). Bayer has alleged that Sun Pharma's product infringes three of its US Patents expiring on June 30, 2014. Bayer is also seeking an injunction against Sun Pharma preventing it from engaging in manufacture and marketing of its generic version in the United States. The Yasmin/YAZ (drospirenone + ethinyl estradiol) families of contraceptive pills were Bayer's best-selling products in 2009, with US sales of approximately US$782 million.
Product Launches
Plans to launch Lunesta in November 2013
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Yasmin/YAZ has annual sales of US$ 782 million
Dr Reddy’s launches generic Protonix in US market Dr Reddy’s Laboratories has launched Pantoprazole Sodium (Antiulcerant) Delayed-Released tablets (20 mg and 40 mg strengths), a bioequivalent generic version of Protonix Tablets in the US market. The FDA approved Dr Reddy’s ANDA for Pantoprazole Sodium Delayed-
Dr Reddy’s patent expire on January 19, 2011
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Released tablets on January 19, 2011. Pantoprazole Sodium DelayedReleased tablets had total US sales of approximately $1.8 billion for the 12 months ending September 30, 2010 according to IMS Health. Both strengths of Dr Reddy’s Pantoprazole Sodium Delayed-Released tablets are available in 90 count bottles. Eurocor GmbH launch Freeway in German market Opto Circuits (India), a subsidiary of Eurocor GmbH presented its latest development in the second generation PTA balloon technology Freeway 014 and Freeway 035 to the German market for the very first time at the LINC (Leipzig Interventional Course) on January 2011. The two new products have already been premiered in London in November 2010.
M&As and demerger
Opto has already launched Freeway in the UK market in November 2010
Aurobindo divests China Penicillin-G business Aurobindo Pharma has entered into a definitive agreement with China National Pharmaceutical Group Corporation (Sinopharm) to divest its subsidiary Aurobindo (Datong) Bio Pharma Co Ltd, China (ADBPL), subject to regulatory approvals. Sinopharm will initially buy 51% in ADBPL and its stake would eventually go above 80%. APL's investment of 19.50% post divestment will be strategic in nature to ensure uninterrupted supply of raw materials at competitive price. ADBPL is engaged in manufacturing of 6APA, a derivative of Penicillin-G and most of its production is consumed by Aurobindo Pharma Ltd (APL) India. In the past, the performance of ADBPCL has been affected due to economies of scale and it is incurring losses. APL's loan of US$23 million to ADBPL will be entirely paid back.
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Cadila joins hand with Bayer to market Bayer drugs in Indian market Cadila Healthcare and Bayer HealthCare have signed an agreement to set up the joint venture company Bayer Zydus Pharma for the sales and marketing of pharmaceutical products in India. Each party will hold 50% of the shares of Bayer Zydus Pharma, headquartered in Mumbai, and be equally represented on its management board. Bayer Zydus Pharma will start operations with Bayer HealthCare’s Pharmaceutical Division contributing its existing sales and marketing business in India to the new company and Cadila contributing its women’s healthcare products, diagnostic imaging business and other products. Bayer Zydus Pharma will operate in key segments of the Indian pharmaceuticals market with a focus on women’s healthcare, metabolic disorders, diagnostic imaging, cardiovascular diseases, anti-diabetic treatments and oncology. In addition to Bayer HealthCare’s currently existing pharmaceutical product portfolio in India, the joint venture is also intended to focus on the sales and marketing of future patented pipeline pharmaceutical products. Both Bayer HealthCare and Cadila will supply the joint venture with products sourced from its manufacturing operations at existing locations. Natco sells its US pharma retail store Nick Drugs Natco’s US-based arm K&C Pharmacy has exited from a local drugs retail chain, Nick's Drugs based in New Jersey. Natco Pharma holds 75% stake in K&C Pharmacy. The company does not see any significant effect on the revenues and profitability. Nick's Drugs revenues were predominantly guided by Medicaid reimbursements from the State of New Jersey, however of-late there have been significant reductions in the reimbursements because of budgetary restrictions. After the sale, Natco
The product manufactured by JV would be marketed by both companies
Natco is currently left with only one pharma store
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now owns and operates only one pharma store 'SaveMart Pharmacy', through its wholly owned subsidiary Natco Pharma Inc in Lancaster. Strides sets up a JV in Brazil- based BioChimico Strides Arcolab’s wholly owned subsidiary Agila Specialties signed an agreement with Brazil-based BioChimico to set up a joint venture company for the Brazilian hospital market. Agila will be 52% partner in the JV. As per the terms, BioChimico and Agila will transfer selected Brazilian IPs to the joint venture to market products jointly. Strides' Brazilian facility in Campos and BioChimico's two manufacturing plants in Rio de Janeiro and Itatiaia will manufacture products on a predetermined cost model and transfer the products to the JV for onward distribution in the Brazilian hospital market. BioChimico is a long standing hospital player in Brazil with a leadership position in anaesthetics, a domain in which Strides does not operate until now.
R & D Developments
BioChimico is a long standing hospital player in Brazil with a leadership position in anaesthetics, a domain in which Strides does not operate until now
Biocon IN-105 fails to meet its primary goal Biocon has said that initial data from late-stage clinical trials on its experimental oral insulin drug for diabetes did not meet the desired results but said it was committed to the global development of the drug. In the final-stage trials being conducted in India, IN-105 did not meet its primary target of lowering HbA1c levels, or a haemoglobin count, in patients with type 2 diabetes. The firm was further assessing the data from the trial, Biocon said, adding that the drug had met secondary targets on efficacy and safety. The company plans to start looking for a global pharmaceutical partner to continue the development of the drug.
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Dr Reddy’s enters into research collaboration with UK based Argenta Dr Reddy’s Laboratories has entered into a research partnership with UKbased contract research organization Argenta. Argenta will apply its integrated drug discovery platform and expertise to find potential new drug targets for Dr Reddy’s in the area of pain and inflammation. According to Argenta, the aim of the collaboration is to deliver high quality development candidates to support Dr Reddy’s research efforts for proprietary products. Argenta’s contract research includes expertise in medicinal chemistry, computer-aided drug discovery, in vitro biology, analytics, in vivo pharmacokinetics, pharmacology and world-leading respiratory models.
Tie Ups
Strides signs a deal to supply 22 generic products to Pfizer Strides Arcolab has struck a deal with Pfizer to sell 16 of its approved abbreviated new drug approval (ANDAs) and six filed ANDAs. These 22 filings were under an equal joint venture between Strides and US-based Nasdaq listed pharmaceutical company Akorn, which was formed in 2005. Strides will be entitled to $28.2 million in cash as its share of the consideration in addition to entering into supply agreement with Pfizer for manufacture and supply of these products. With this new pact Strides now has 66 various drugs, which will be marketed by Pfizer across the globe. Strides, early this year, had struck a deal with Pfizer for 44 injectables, mostly in cancer care.
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Plant approvals & commissioning
Japanese health regulator approves Elder manufacturing facility Elder Pharmaceuticals has received accreditation from the Ministry of Health-Japan for its Active Pharmaceutical Ingredient (API) plant at Patalganga, Maharashtra. Elder has already filed a PCT patent for one of the advanced intermediates for the Japanese market. Torrent to commission Sikkim facility in Q1FY12 Torrent Pharmaceuticals is all set to commission its | 125 crore Sikkim facility within the first quarter of next fiscal. The formulations facility would produce 3 billion tablets and capsules per annum. Torrent’s manufacturing plant at Chhatral has a capacity to manufacture approximately 3 billion tablets, capsules and vials and 15,000 kg of bulk drugs or active pharmaceutical ingredients (API) while its Baddi facility can manufacture 3.6 billion tablets, 150 million capsules, 10 million oral liquid bottles and 12 million sachets per annum. With the Sikkim facility coming on stream, the company's formulation capacity will touch close to 10 billion tablets and capsules.
Other developments
Ranbaxy CFO Omesh Sethi quits Ranbaxy President and CFO Omesh Sethi has resigned on January 25. The company did not give a reason for the departure. The financial chief’s resignation is the second exit by a senior Ranbaxy executive in five months, after former Chief Executive Officer Atul Sobti quit in August. Sethi, who joined the company in 1989, has made a “significant 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF. contribution” to improve its financial performance and also was involved in mergers and acquisitions.
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ICICI Securities Limited
ICICIdirect.com coverage universe (Pharma)
Biocon Idirect Code MCap BIOCON 7340.0 CMP Target Upside (%) 367 432 18 FY10 FY11E FY12E FY13E Dishman Idirect Code MCap DISHPHA 1420.3 CMP Target Upside (%) 176 168 -5 FY09 FY10 FY11E FY12E IPCA Labs Idirect Code MCap IPCLAB 3896.0 CMP Target Upside (%) 310 325 5 FY10 FY11E FY12E FY13E Piramal Health Idirect Code MCap Sun Pharma Idirect Code MCap SUNPHA 44758.6 CMP Target Upside (%) 436 416 -5 FY09 FY10 FY11E FY12E NICPIR 10032.0 CMP Target Upside (%) 472 NA NA FY09 FY10 3281.1 3671.1 Sales (| Cr) 4271.4 4019.8 5808.6 6844.1 15.1 23.1 EPS (|) 17.6 13.0 16.7 17.7 31.2 20.5 PE(x) 24.8 33.4 26.1 24.7 19.4 15.2 EV/E (x) 23.2 31.0 22.2 20.3 24.0 28.3 RoNW (%) 25.7 17.7 19.0 17.3 17.7 18.8 RoCE (%) 28.3 19.5 20.3 18.1 RoCE (%) 16.4 14.6 18.8 20.1 RoCE (%) 14.8 16.5 17.1 18.3 RoCE (%) 25.7 20.4 24.7 24.7 RoCE (%) 11.5 12.9 15.6 17.9 RoCE (%) 19.8 20.4 17.0 18.0 Sales (| Cr) 2367.8 2800.1 3183.0 3648.0 Sales (| Cr) 1062.4 915.4 911.0 1044.0 Sales (| Cr) 1559.6 1832.7 2171.8 2595.8 Sales (| Cr) EPS (|) 14.7 19.4 20.5 24.0 EPS (|) 18.2 14.6 15.1 16.8 EPS (|) 16.4 19.9 21.4 29.5 EPS (|) PE(x) 25.0 18.9 17.9 15.3 PE(x) 9.7 12.1 11.6 10.5 PE(x) 18.9 15.6 14.5 10.5 PE(x) EV/E (x) 16.4 11.5 10.4 9.0 EV/E (x) 8.0 10.5 10.7 8.4 EV/E (x) 13.4 11.6 9.6 7.2 EV/E (x) RoNW (%) 16.7 18.8 17.2 17.3 RoNW (%) 20.9 15.0 13.8 13.8 RoNW (%) 23.7 23.2 20.6 22.6 RoNW (%) RoCE (%) 15.6 19.9 19.1 19.5 RoCE (%) 13.6 9.1 7.4 9.6 RoCE (%) 20.5 20.3 22.1 24.8 RoCE (%)
Glenmark Sales (| Cr) EPS (|) PE(x) EV/E (x) RoNW (%) ISIEmergingMarketsPDF in-nmimsmum from 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF. Idirect Code GLEPHA CMP 290 FY10 2093.0 7.7 42.4 24.4 19.4 Target MCap 7836.0 Upside (%) 396 37 FY11E FY12E FY13E Lupin Idirect Code MCap LUPIN 18472.0 CMP Target Upside (%) 420 530 26 FY10 FY11E FY12E FY13E Unichem Labs Idirect Code MCap UNILAB 1768 CMP Target Upside (%) 196 227 16 FY10 FY11E FY12E FY13E Indoco Remedies Idirect Code MCap Opto Circuits Idirect Code Mcap (| cr) OPTCIR CMP Target 4765.0 % Upside 260 329 27% FY09 FY10 FY11E FY12E INDREM 565.0 CMP Target Upside (%) 460 511 11 FY10 FY11E FY12E FY13E 2484.9 2986.7 3454.4 Sales (| Cr) 2500.7 2986.0 3485.7 4118.4 Sales (| Cr) 765.5 843.4 993.3 1149.1 Sales (| Cr) 398.3 486.9 581.1 712.6 Sales (| cr) 818.5 1077.6 1558.6 2267.7 12.2 18.2 21.7 EPS (|) 12.2 18.2 19.9 23.3 EPS (|) 14.7 12.7 18.3 20.6 EPS (|) 34.4 42.0 48.7 63.9 EPS (|) 22.2 14.2 18.3 21.9 26.7 17.8 14.9 PE(x) 23.7 15.9 14.6 12.4 PE(x) 13.3 15.4 10.7 9.5 PE(x) 13.4 11.0 9.4 7.2 PE(x) 11.7 18.3 14.2 11.9 17.4 12.9 10.9 EV/E (x) 15.5 12.0 10.4 9.1 EV/E (x) 9.5 9.0 6.5 6.0 EV/E (x) 11.2 8.4 6.4 5.3 EV/E (x) 20.1 13.3 12.3 9.9 13.9 20.7 20.6 RoNW (%) 14.1 17.7 16.8 17.0 RoNW (%) 23.3 16.9 20.6 19.5 RoNW (%) 13.6 14.6 14.9 16.7 RoNW (%) 26.1 26.0 20.1 21.3
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RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Add, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: 20% or more; Buy: Between 10% and 20%; Add: Up to 10%; Reduce: Up to -10% Sell: -10% or more; Pankaj Pandey Head – Research ICICIdirect.com Research Desk, ICICI Securities Limited, 7th Floor, Akruti Centre Point, MIDC Main Road, Marol Naka, Andheri (East) Mumbai – 400 093 [email protected] ANALYST CERTIFICATION
We /I, Siddhant Khandekar CA- INTER Krishna Kiran Konduri MBA FINANCE research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
[email protected]
Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities, its subsidiaries and associated companies, their directors and employees (“ICICI Securities and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return of investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities and affiliates might have received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings, corporate finance, investment banking or other advisory services in a merger or specific transaction. ICICI Securities and affiliates expect to receive compensation from the companies mentioned in the report within a period of three months following the date of publication of the research report for services in respect of public offerings, corporate finance, investment banking or other advisory services in a merger or specific transaction. It is confirmed that Siddhant Khandekar CA- INTER Krishna Kiran Konduri MBA FINANCE research analysts and the authors of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Our research professionals are paid in part based on the profitability of ICICI Securities, which include earnings from Investment Banking and other business. ICICI Securities or its subsidiaries collectively do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. It is confirmed that Siddhant Khandekar CA- INTER Krishna Kiran Konduri MBA FINANCE director or advisory board member of the companies mentioned in the report. research analysts and the authors of this report or any of their family members does not serve as an officer,
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ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. ICICI Securities and affiliates may act upon or make use of information contained in the report prior to the publication thereof. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
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Monthly Update
Index Performance as on 31 January 2011
Return (%) 1Months Nifty Sensex BSE Healthcare -10.3 -10.6 -7.4 3Months -10.0 -9.9 -4.9 6Months 1.2 1.2 10.9 1Year 12.4 12.1 27.6
February 4, 2011
Pharma Pill
Summary January saw majority of pharma companies declaring Q3FY11 results. While most companies registered sound sales growth YoY, EBITDA margins for most of them remained under pressure. This was mainly on account of adverse currency fluctuation as well as a rise in staff and R&D costs. Cost pressure was somewhat severe for smaller players like Unichem, Ipca and Torrent. In terms of sales, while companies like Sun and Opto saw robust growth on account of inorganic growth, majority of big players like Glenmark, Lupin, Cadila, Sun and smaller players like Torrent and surprisingly Alembic registered good growth in domestic formulations, which normally are subdued in Q3. On the US generic front, Lupin and Glenmark were negative surprises but these players registered robust growth in the ex-US markets. Thus, they made good the US slowdown. However, companies having a German presence like Dr Reddy’s and Biocon continued to bleed in that market on account of the 16% rebate proposed by the government for three years. On the regulatory front, there were eight final approvals and four tentative approvals from the USFDA. Aurobindo and Dr Reddy’s Laboratories have received tentative approvals for two drugs each. Other companies like Alembic, Glenmark Pharma, Lupin, Natco, Torrent and Dr Reddy’s received final approval for one drug each while Cadila Healthcare got the nod for two drugs. In a first of its kind of compulsory licensing challenge, Natco Pharma has sought licensing from Pfizer and Bayer to launch their patented products for HIV and cancer, respectively, under the cover of compulsory licensing. On the R&D front, we saw 122.170.126.130 ondiscouraging results for its diabetic drug in phase III Biocon reporting 2011-02-17 04:09:50 EST. DownloadPDF. trials. During the month, Cadila formed a new JV with Bayer Healthcare to market its products from niche categories. Glenmark received an unfavourable verdict from a US jury regarding anti-hypertensive drug Tarka, which asked the company to stop sales of Tarka and also slapped a | 70-crore penalty to be payable to Abbott. During the month, the Indian patent office denied patent protection to Abbott’s HIV drug Kaletra and allowed the generic sale of this product by Cipla and Matrix.
Regulatory approvals
Stocks Performance
Return (%) Company Sun Pharma Dr Reddy's Labs Cipla Ranbaxy Labs Glaxosmit Pharma Lupin Cadila Health. Piramal Health Divi's Lab. Glenmark Pharma. Biocon Aurobindo Pharma Torrent Pharma. Opto Circuits Ipca Labs. Jubilant Life Strides Arcolab Orchid Chemicals FDC 1month 3month 6month 1year -9 -4 -10 -7 -2 -11 7 -6 -2 -13 -16 -9 1 -5 -10 -19 -7 1 -9 5 -2 -6 -6 2 -3 18 -8 -8 -10 -15 1 5 -13 -7 -28 -1 3 -3 24 20 2 22 13 13 30 -9 -15 14 13 22 3 -9 8 -37 30 58 17 50 45 5 21 50 49 73 20 6 27 30 48 31 17 35 -25 110 85 41 Mcap 31-Jan 45629 27489 26676 22976 19304 18852 16862 9189 8433 8288 6998 6910 4913 4574 3789 3580 2393 2071 1882
Unichem Labs. -17 -12 15 46 ISIEmergingMarketsPDF in-nmimsmum 1796 from Dishman Pharma. -13 -27 -39 -39 1077 J B Chem & Pharm Alembic Natco Pharma Elder Pharma Indoco Remedies Mcap in | crore -17 2 -10 1 -10 -3 -8 4 -6 -12 20 19 43 15 8 94 52 149 25 36 993 914 789 767 543
Price movement
8000 7000 6000 5000 4000 3000 2000 1000 0 Aug-10 Jun-10 Oct-10 Dec-10 Feb-10 Apr-10 25000 20000 15000 10000 5000 0
Aurobindo gets USFDA nod for two drugs Aurobindo Pharma has received tentative approval from the USFDA to manufacture and market Levofloxacin tablets of 250 mg, 500 mg, 750 mg. Levofloxacin tablets are indicated for the treatment of adults with mild, moderate and severe infections caused by susceptible strains of the designated micro organisms such as pneumonia, bacterial sinusitis, etc. The product has a market size of nearly US$1.45 billion for the 12 months ending September 2010 according to IMS. It received tentative approval from the USFDA to manufacture and market Famciclovir tablets of 125 mg, 250 mg and 500 mg. Famciclovir Tablets 125 mg, 250 mg and 500 mg are the generic versions of Novartis Pharmaceuticals Corp’s Famvir Tablets of 125 mg, 250 mg and 500 mg. It is indicated for the treatment of recurrent mucocutaneous herpes simplex infections in HIV-infected patients and suppression of recurrent genital herpes in immuno-competent patients. The product has a market
BSE Healthcare
Sensex
Analyst’s name
Siddhant Khandekar [email protected] Krishna Kiran Konduri [email protected]
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ICICI Securities Limited
size of approximately US$170 million for the 12 months ending September 2010 according to IMS. Cadila Healthcare receives approval for hypertension drug Cadila Healthcare's US arm has got tentative approval from the USFDA for hypertension drug Irbesartan tablets. The company has got approvals for tablets of 75 mg, 150 mg and 300 mg strengths. The patent for the drug will expire in March 2012. Currently, the drug is marketed by BristolMyers Squibb and Sanofi-Aventis under different brand names with annual sales of $1.3 billion and $2.1 billion, respectively. USFDA grants marketing approval for Glenmark’s anti-malarial drug Glenmark Generics, the US subsidiary of Glenmark Pharmaceuticals received final approval from the USFDA for abbreviated new drug application (ANDA) for the generic version of Atovaquone & Proguanil Hydrochloride tablets in the strengths of 250 mg and 100 mg. GlaxoSmithKline (GSK) originally developed it and markets this product as Malarone in the US, which is indicated for the prevention and treatment of malaria. The patent is set to expire in 2014. The total US sales as reported by IMS Health for the 12 month period ending December 2009 were approximately US$ 64 million. Glenmark Generic is the first to file ANDA for the product. Interestingly, in April 2010 it made an out-of-court settlement with GSK over an earlier lawsuit filed in a US court. According to the terms of settlements agreement, which are still subject to review by the Federal Trade Commission and Department of Justice, Glenmark will be able to sell its generic tablets under a royaltybearing licence from GSK from the third quarter of 2011, or earlier under certain circumstances.
Glenmark plans to launch Malarone in Q2FY12
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Lupin Pharmaceuticals, Inc (subsidiary of Lupin) has been granted final approval for its Nabumetone tablets, 500 mg and 750 mg strengths from the US Food and Drug Administration. Lupin’s Nabumetone is the ABrated generic equivalent of GlaxoSmithKline’s Relafen tablets indicated for acute and chronic treatment of the signs and symptom of osteoarthritis and rheumatoid arthritis. Annual sales for the Nabumetone market in the US was $66.8 million for the 12 months ended September 2010, based on I Health sales data. Strides gets USFDA approval for anti-inflammatory injection Strides Arcolab received an approval from the USFDA for an additional package size of anti-inflammatory adenosine injection, USP, 3 mg/MI packaged in 12 mg/4 ml single-dose vials. The product will be launched upon expiry of applicable innovator patents. The US innovator market for Adenosine presentations is approximately US$94 million. Strides had in 2010 received approval for Adenosine Injection 60 mg per 20 ml and 90 mg per 30 ml vials. The product will be launched under the partnership between Strides and Sagent Pharmaceuticals wherein Strides is developing and supplying more than 25 injectable products for the US market, which is marketed by Sagent.
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Exhibit 1: Summary of USFDA approvals
Company Alembic Dr Reddy's Labs Glenmark Pharma Lupin Natco Pharma Torrent Pharma Strides Arcolab Cadila Healthcare Cadila Healthcare Company Aurobindo Pharma Aurobindo Pharma Dr Reddy's Labs Dr Reddy's Labs Drug Name Lamotrigine tablets Pantoprazole Sodium tablets Atovaquone and Proguanil Hydrochloride tablets Nabumetone Tablet Chloroquine Phosphate tablet Pantoprazole Sodium tablets Adenosine injection Glipizide; Metformin Hydrochloride tablet Tramadol Hydrochloride tablet Drug Name Levofloxacin tablets Famciclovir tablets Sumatriptan; Naproxen Sodium tablet Clopidogrel tablets Final Approvals Therapeutic Area Central Nervous System Anti-Ulcerant Anti-Malarial Anti-inflammatory Anti-Malarial Anti-Ulcerant Anti-inflammatory Anti-diabetic Pain Management Tentative Approvals Therapeutic Area Anti-infective Anti-retroviral Anti-inflammatory Anti-clotting Innovator company GlaxoSmithKline Pharma Hospira GlaxoSmithKline Pharma GlaxoSmithKline Pharma Sanofi Aventis Hospira Astellas Bristol Myers Squibb Ortho McNeil Janseen Pharma Innovator company Ortho McNeil Janseen Pharma Novartis Pharmaceuticals GlaxoSmithKline Pharma Sanofi Aventis Generic Version of Lamicta; Protonix Malarone Relafen Aralen Protonix Adenocard Metaglip Ultram Generic Version of Levaquin Famvir Treximet Plavix Market Size US$ 452 million US$ 1.8 billion US 64 million US$ 66.8 million NA US$ 1.8 billion US$ 94 million US$ 30 milliom NA Market Size US$1.45 billion US$ 170 million NA US$ 200 million
Source: Company, ICICIdirect.com Research
Financial Performance
Alembic’s profit grows 127% YoY
Total 20% growth in the domestic formulation business drives the growth in overall sales
Alembic reported a 23% increase in revenues to | 373.79 crore for the quarter ended December 31, 2010. The company posted 127% growth in net profit at | 30.84 crore. Domestic formulations grew ~20% YoY to | 184.24 crore above industry growth rate of ~17%. Biocon sales up 15% YoY
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Biocon has registered a net profit of | 101 crore in the third quarter of the current financial year, a rise of 24% YoY. Total income rose 15% to | 738 crore and its operating profit saw a rise of 34% to | 178 crore during the same period. The sales growth was driven by biopharmaceuticals and CRAMS nullifying de-growth from the German subsidiary Axicorp. Sales from Axicorp will go down from Q4 as the German government mandated a 16% rebate on all pharma drugs. Cadila Healthcare net profit at | 162 crore Cadila Healthcare registered a total income of | 1170 crore in Q3FY11, up 18% YoY on a consolidated basis. EBITDA was up 22% YoY to | 256 crore. Net profit stood at | 162 crore, up 25% YoY. The income growth was mainly driven by a growth of 20% in formulations exports and a growth of 17% in domestic formulations. The company’s consumer wellness business was up 21%. Dr Reddy’s posts profit, but numbers disappoint Dr Reddy's Laboratories swung to profit for the quarter ended December 2010. Its third quarter net profit rose to | 273.2 crore against a net loss of | 521.7 crore in the same quarter previous year. The company recorded a 9.7% increase in revenues to | 1898.5 crore, on account of a growth in sales of the generic segment, especially in the US. During the quarter, the company launched 42 generic products and filed 21 new product registrations globally. It entered into two settlement agreements with AstraZeneca in the US related to abbreviated new drug application filed for generic versions of Nexium (esomeprazole) and Accolate (zafirlukast).
Higher litigation cost drags overall margins
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The company's profit, however, was below expectations due to higher selling, general and administration (SG&A) expenses including litigation costs in the US. The German market continued to be a drag on its sales. Speciality business drives Glenmark sales Glenmark's consolidated net sales moved up by 17% to | 751 crore for Q3FY11. There was, however, some pressure on the EBITDA margin on account of lower realisations and inventory adjustments. Margins declined by ~330 bps. Consolidated net profit went up 16.5% to | 109.56 crore. The company's speciality business registered a growth of 25% to | 452.06 crore. Its speciality business in India saw a growth of 30% to | 239 crore while that in the rest of the world grew 27%t to | 115 crore. The Latin American business increased by 88% to | 52.83 crore and in Europe it clocked a growth of 27% to | 44.77 crore. The generic sales, however, recorded tepid growth of 7% and touched | 298.8 crore mainly due to subdued growth in the US, which grew just 8% to | 204.1 crore. This was attributable to the discontinuation of the cardiovascular drug nitroglycerine and a slower ramp-up of generic products for which it has approval. Indoco Remedies net profit up 14% Indoco's Q3FY11 sales increased 19.4% to | 114.3 crore mainly driven by the growth in formulation exports and domestic API business. However, at the EBITDA level, margins were subdued at 12.7% due to a change in the product mix, increase in raw materials cost and fall in realisation due to currency fluctuation. Increase in the taxation YoY restricted the net profit growth to 14% to | 8.8 crore. The company expects the domestic formulation business to be normalised in due course. It also expects a couple of product launches in semi-regulated markets in Q4FY11. Ipca’s EBITDA margins plunge 330 bps Ipca's Q3FY11 sales increased 18% YoY to | 466.4 crore backed by 33% rise in the export formulation business and almost 17% growth in domestic branded formulations. EBITDA margins declined ~330 bps YoY as sales & marketing expenses and expenses related to newly joined employees went up. Net profit increased 10% to | 63.9 crore. The export formulations segment is likely to continue its growth momentum, going forward. Incremental sales from newly added medical representatives will also support growth in sales from H2FY12E onwards. However, EBITDA margins will continue to be under pressure for at least two or three quarters. Lupin’s sales increase by 16.9% YoY in-spite of US slow down Lupin’s net sales grew 16.9% YoY to | 1467.2 crore for Q3FY11 backed by formulations sales growth in the US, Europe and Japan. EBITDA margins declined 90 bps to 19.7%. This was on the back of an increase in R&D cost, forex loss of | 17 crore and rise in employee expenses due to new recruitment at the Indore SEZ and also due to addition of ~160 medical representatives. However, net profit was up 39.5% to | 224.1 crore on the back of lower tax provision.
Absence of sales from Nitroglycerine leads to lower growth in US business sales
Indoco will launch a couple of products in semi-regulated markets in Q4FY11
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Increase in employees cost and cost related to new employee’s dragged overall margins
Forex loss and higher R&D cost dragged margins
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Opto’s like to like sales up by 37% Opto Circuits has posted a net profit after minority interest of | 95.67 crore for the quarter ended December 31, 2010 as compared to | 65.68 crore for the quarter ended December 31, 2009, a rise of 45.67%. Total income has increased 70.59% to | 428.12 crore. The numbers are not comparable as the company acquired majority stake in US based Cardiac Science in December. On a like-to-like basis sales grew ~37% YoY. Sun Pharma reported muted net profit growth of 3% YoY Sun Pharma reported ~57% growth in net sales to | 1603 crore driven by consolidation of Israel-based Taro Pharma’s accounts. Taro clocked ~| 459 crore sales during the quarter. Without Taro, on a like to like basis the sales growth was just ~11%. This was mainly on account of higher base of Q3FY10 on account of sales from anti-ulcerant Protonix, which it stopped in the current fiscal due to litigation issues. Due to this consolidation, EBIDTA margins declined by ~660 bps and PAT also grew by just ~3% YoY to | 350 crore. Another US subsidiary Caraco reported ~20% de-growth in sales to | 180 crore on account of continuance of production stoppage due to USFDA related issues. The company does not expect the restart of production in Q4FY11. Sales from Indian branded formulations grew 20% to | 640 crore driven by nine product launches and further consolidation in at least six therapeutic categories where Sun is the market leader. Torrent Pharma profit dips 7.28% YoY Torrent Pharmaceuticals’ consolidated net profit declined 7.28% YoY to | 76.91 crore for the third quarter ended December 31, 2010. Profits were affected due to planned expansions in domestic and international 122.170.126.130 on 2011-02-17 04:09:50 EST. The Q3 sales stood at | 565 markets and adverse currency movements. DownloadPDF. crore, up 20%, on the back of robust growth in the domestic formulation business and continued buoyancy in the international business. During Q3, domestic formulation business recorded sales of | 214 crore, growing 17%. Sales outside India jumped 19% to | 292 crore. Operations in Brazil registered an impressive performance with sales growth of 15% to | 102 crore. Germany-based Heumann’s operations recorded sales of | 76 crore with growth of 15%. Europe (other than Heumann), Russia & CIS and rest of the world operations grew 22% with sales of | 78 crore. Unichem’s net profit declines 24% YoY Unichem Laboratories’ net profit decreased ~24% to | 25.60 crore for the third quarter ended December 2010. The decrease in profits was essentially on account of increased investments in existing and new marketing divisions and consequent payroll costs, higher manufacturing costs and depreciation due to commissioning of new plants. Total income grew 14% YoY to | 197 crore.
IP Issues
Excluding sales from Taro, the base business was up just ~ 11%
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Export sales witnessed a growth of 19% YoY
Commission of new facilities hits EBITDA margins
Takeda Pharma sues Cadila Healthcare on Actos Takeda Pharmaceuticals has filed a suit against Cadila Healthcare at a US district court alleging that the latter would be infringing the former's patent coverage by attempting to manufacture and market diabetes drug Actos (pioglitazone hydrochloride) in the US market. Actos, which is used to improve glycemic control in type-II diabetes patients, is a
Takeda resolved patent litigation with various generic customers over the same drug
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blockbuster drug that clocked revenues worth $3.4 billion only in the US market for the year ending December 31, 2009, according to data of market research firm IMS. The product is among the largest selling diabetic drugs globally and the eighth largest selling prescription drug in any therapeutic segment in the US market. Takeda has already resolved patent litigation with eleven generic companies chasing the diabetes drug opportunity in the US market early this year. India’s patent office denies Abbott’s Kaletra India’s patent office has denied protection to Abbott Laboratories’ AIDS drug Kaletra allowing generic drug makers to continue selling their own versions of the drug. The patent office said that the steps involved in making Kaletra do not constitute an invention. The initiative for medicines, access & knowledge, as well as Cipla and Matrix had challenged Abbott’s patent application. Abbott is reviewing the decision and weighing its options. Kaletra is a combination of two anti-virals. The product generated about $1.4 billion in sales in 2009, making it Abbott’s second-best seller after the arthritis drug Humira. Pfizer sues Dr Reddy’s over generic Lipitor Pfizer Inc. has taken Dr Reddy's Laboratories to court in an effort to delay the launch of the Indian company's low-cost version of atorvastatin in the US. In a filing before a local court in Delaware, Pfizer has said Dr Reddy's plans to launch atorvastatin, a generic version of its anti-cholesterol medicine Lipitor, will infringe upon its patent. Lipitor gets about $12 billion in annual sales for Pfizer globally. Dr Reddy’s gets favourable decision for generic Allegra D24
ISIEmergingMarketsPDF in-nmimsmum from 122.170.126.130 on 2011-02-17announced thatDownloadPDF. Dr Reddy’s Laboratories has 04:09:50 EST. a US District
Abbott’s second best seller drug patent was denied by the Indian Patent Office
Court of New Jersey has filed a stipulation and order lifting an earlier motion for preliminary injunction and clearing the sale of Dr Reddy’s generic product version of Allegra D24 (fexofenadine hydrochloride/pseudoephedrine hydrochloride 180 mg/240 mg extended release tablet), which was approved by the FDA on March 16, 2010. In addition, plaintiffs’ Sanofi Aventis and Albany Molecular Research have been required to post a security with the court, an amount of US$40 million towards the possibility that the injunction had been wrongfully granted. Having been excluded from launching the generic product since the June 2010 hearing, Dr Reddy’s intends to pursue an award of this security. Federal jury suggests Glenmark to stop supplying of generic Tarka Sanofi Aventis SA and Abbott Laboratories won a US jury trial in which the drug makers sought to halt Glenmark’s sales of a generic version of their hypertension medicine Tarka. Abbott was awarded US$16 million in damages. A federal jury in Newark, New Jersey rejected Glenmark’s challenge to the validity of a Sanofi patent that expires in February 2015. Glenmark argued that the patent covered an invention that was protected by an expired patent. Abbott, which paid US$290 million for an exclusive license to Tarka, was seeking US$25 million as compensation for profit it lost because of Glenmark’s sale of the generic drug. Sanofi owns the patent on Tarka, first approved by drug regulators in 1996. The company is now awaiting a verdict from the judge at the US court in the coming days. The judge's ruling, which can be different from that of the jury's, will, therefore, holds the key.
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Lupin settles patent litigation with Dainippon Sumitobo Pharma Lupin and its subsidiary Lupin Pharmaceuticals Inc have settled all litigation with Dainippon Sumitobo Pharma Co arm Sunovion Pharmaceuticals Inc over Lunesta Eszopiclone tablets. Lupin said the settlement entitled the company to sell its generic version of Lunesta under a license from November 30, 2013. Sales of Lunesta, which is used to treat insomnia (Sleeping disorder), in US in the 12 months ended September 2010, were at $787 million. Natco Pharma seeks voluntary licenses for Pfizer’s HIV drug and Bayer’s Cancer drug Natco Pharma has sought a voluntary licence from Pfizer to make and sell copies of its HIV medicine in India, a first step to a provision that permits firms to legally make patented drugs of other companies. Natco sent a notice to Pfizer in November saying Pfizer's drug was too expensive for HIV patients in India, and that Natco can sell its own product at about one-fifth the price. This is the first step in what is known in pharma industry as compulsory licensing (CL), a provision that allows generic drug makers to make and sell low-cost version of a patented drug under certain conditions. Pfizer has time till May to reply. Pfizer's HIV drug maraviroc sold under the brand Celsentri, costs about | 65,000 for a month dosage, said Natco in its notice to the world's largest drugmaker. The Indian company has said it can make a copy that will cost | 15,000 a month to HIV patients. Natco plans to seek a compulsory licence from the government to make Bayer AG's Nexavar (a cancer drug) in India, invoking a provision in local 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF.patented drugs laws that allow generic drugmakers to make and sell cheaply if the medicine is unaffordable. Bayer last month rejected Natco's plea to seek a voluntary licence to make the drug in the country. Nexavar's dosage for a month costs | 2.8 lakh while Natco says it can sell its brand at less than | 10,000. India has an estimated 5 lakh cancer patients. Bayer sues Sun Pharma for generic oral contraceptive YAZ drug German pharma major Bayer AG has filed patent infringement lawsuits against Sun Pharma in the US, following a Paragraph IV certification, as part of the latter's Abbreviated New Dug Application (ANDA) to manufacture a generic version of oral contraceptive YAZ (drospirenone 3 mg + ethinyl estradiol 0.3 mg). Bayer has alleged that Sun Pharma's product infringes three of its US Patents expiring on June 30, 2014. Bayer is also seeking an injunction against Sun Pharma preventing it from engaging in manufacture and marketing of its generic version in the United States. The Yasmin/YAZ (drospirenone + ethinyl estradiol) families of contraceptive pills were Bayer's best-selling products in 2009, with US sales of approximately US$782 million.
Product Launches
Plans to launch Lunesta in November 2013
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Yasmin/YAZ has annual sales of US$ 782 million
Dr Reddy’s launches generic Protonix in US market Dr Reddy’s Laboratories has launched Pantoprazole Sodium (Antiulcerant) Delayed-Released tablets (20 mg and 40 mg strengths), a bioequivalent generic version of Protonix Tablets in the US market. The FDA approved Dr Reddy’s ANDA for Pantoprazole Sodium Delayed-
Dr Reddy’s patent expire on January 19, 2011
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Released tablets on January 19, 2011. Pantoprazole Sodium DelayedReleased tablets had total US sales of approximately $1.8 billion for the 12 months ending September 30, 2010 according to IMS Health. Both strengths of Dr Reddy’s Pantoprazole Sodium Delayed-Released tablets are available in 90 count bottles. Eurocor GmbH launch Freeway in German market Opto Circuits (India), a subsidiary of Eurocor GmbH presented its latest development in the second generation PTA balloon technology Freeway 014 and Freeway 035 to the German market for the very first time at the LINC (Leipzig Interventional Course) on January 2011. The two new products have already been premiered in London in November 2010.
M&As and demerger
Opto has already launched Freeway in the UK market in November 2010
Aurobindo divests China Penicillin-G business Aurobindo Pharma has entered into a definitive agreement with China National Pharmaceutical Group Corporation (Sinopharm) to divest its subsidiary Aurobindo (Datong) Bio Pharma Co Ltd, China (ADBPL), subject to regulatory approvals. Sinopharm will initially buy 51% in ADBPL and its stake would eventually go above 80%. APL's investment of 19.50% post divestment will be strategic in nature to ensure uninterrupted supply of raw materials at competitive price. ADBPL is engaged in manufacturing of 6APA, a derivative of Penicillin-G and most of its production is consumed by Aurobindo Pharma Ltd (APL) India. In the past, the performance of ADBPCL has been affected due to economies of scale and it is incurring losses. APL's loan of US$23 million to ADBPL will be entirely paid back.
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Cadila joins hand with Bayer to market Bayer drugs in Indian market Cadila Healthcare and Bayer HealthCare have signed an agreement to set up the joint venture company Bayer Zydus Pharma for the sales and marketing of pharmaceutical products in India. Each party will hold 50% of the shares of Bayer Zydus Pharma, headquartered in Mumbai, and be equally represented on its management board. Bayer Zydus Pharma will start operations with Bayer HealthCare’s Pharmaceutical Division contributing its existing sales and marketing business in India to the new company and Cadila contributing its women’s healthcare products, diagnostic imaging business and other products. Bayer Zydus Pharma will operate in key segments of the Indian pharmaceuticals market with a focus on women’s healthcare, metabolic disorders, diagnostic imaging, cardiovascular diseases, anti-diabetic treatments and oncology. In addition to Bayer HealthCare’s currently existing pharmaceutical product portfolio in India, the joint venture is also intended to focus on the sales and marketing of future patented pipeline pharmaceutical products. Both Bayer HealthCare and Cadila will supply the joint venture with products sourced from its manufacturing operations at existing locations. Natco sells its US pharma retail store Nick Drugs Natco’s US-based arm K&C Pharmacy has exited from a local drugs retail chain, Nick's Drugs based in New Jersey. Natco Pharma holds 75% stake in K&C Pharmacy. The company does not see any significant effect on the revenues and profitability. Nick's Drugs revenues were predominantly guided by Medicaid reimbursements from the State of New Jersey, however of-late there have been significant reductions in the reimbursements because of budgetary restrictions. After the sale, Natco
The product manufactured by JV would be marketed by both companies
Natco is currently left with only one pharma store
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now owns and operates only one pharma store 'SaveMart Pharmacy', through its wholly owned subsidiary Natco Pharma Inc in Lancaster. Strides sets up a JV in Brazil- based BioChimico Strides Arcolab’s wholly owned subsidiary Agila Specialties signed an agreement with Brazil-based BioChimico to set up a joint venture company for the Brazilian hospital market. Agila will be 52% partner in the JV. As per the terms, BioChimico and Agila will transfer selected Brazilian IPs to the joint venture to market products jointly. Strides' Brazilian facility in Campos and BioChimico's two manufacturing plants in Rio de Janeiro and Itatiaia will manufacture products on a predetermined cost model and transfer the products to the JV for onward distribution in the Brazilian hospital market. BioChimico is a long standing hospital player in Brazil with a leadership position in anaesthetics, a domain in which Strides does not operate until now.
R & D Developments
BioChimico is a long standing hospital player in Brazil with a leadership position in anaesthetics, a domain in which Strides does not operate until now
Biocon IN-105 fails to meet its primary goal Biocon has said that initial data from late-stage clinical trials on its experimental oral insulin drug for diabetes did not meet the desired results but said it was committed to the global development of the drug. In the final-stage trials being conducted in India, IN-105 did not meet its primary target of lowering HbA1c levels, or a haemoglobin count, in patients with type 2 diabetes. The firm was further assessing the data from the trial, Biocon said, adding that the drug had met secondary targets on efficacy and safety. The company plans to start looking for a global pharmaceutical partner to continue the development of the drug.
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Dr Reddy’s enters into research collaboration with UK based Argenta Dr Reddy’s Laboratories has entered into a research partnership with UKbased contract research organization Argenta. Argenta will apply its integrated drug discovery platform and expertise to find potential new drug targets for Dr Reddy’s in the area of pain and inflammation. According to Argenta, the aim of the collaboration is to deliver high quality development candidates to support Dr Reddy’s research efforts for proprietary products. Argenta’s contract research includes expertise in medicinal chemistry, computer-aided drug discovery, in vitro biology, analytics, in vivo pharmacokinetics, pharmacology and world-leading respiratory models.
Tie Ups
Strides signs a deal to supply 22 generic products to Pfizer Strides Arcolab has struck a deal with Pfizer to sell 16 of its approved abbreviated new drug approval (ANDAs) and six filed ANDAs. These 22 filings were under an equal joint venture between Strides and US-based Nasdaq listed pharmaceutical company Akorn, which was formed in 2005. Strides will be entitled to $28.2 million in cash as its share of the consideration in addition to entering into supply agreement with Pfizer for manufacture and supply of these products. With this new pact Strides now has 66 various drugs, which will be marketed by Pfizer across the globe. Strides, early this year, had struck a deal with Pfizer for 44 injectables, mostly in cancer care.
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Plant approvals & commissioning
Japanese health regulator approves Elder manufacturing facility Elder Pharmaceuticals has received accreditation from the Ministry of Health-Japan for its Active Pharmaceutical Ingredient (API) plant at Patalganga, Maharashtra. Elder has already filed a PCT patent for one of the advanced intermediates for the Japanese market. Torrent to commission Sikkim facility in Q1FY12 Torrent Pharmaceuticals is all set to commission its | 125 crore Sikkim facility within the first quarter of next fiscal. The formulations facility would produce 3 billion tablets and capsules per annum. Torrent’s manufacturing plant at Chhatral has a capacity to manufacture approximately 3 billion tablets, capsules and vials and 15,000 kg of bulk drugs or active pharmaceutical ingredients (API) while its Baddi facility can manufacture 3.6 billion tablets, 150 million capsules, 10 million oral liquid bottles and 12 million sachets per annum. With the Sikkim facility coming on stream, the company's formulation capacity will touch close to 10 billion tablets and capsules.
Other developments
Ranbaxy CFO Omesh Sethi quits Ranbaxy President and CFO Omesh Sethi has resigned on January 25. The company did not give a reason for the departure. The financial chief’s resignation is the second exit by a senior Ranbaxy executive in five months, after former Chief Executive Officer Atul Sobti quit in August. Sethi, who joined the company in 1989, has made a “significant 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF. contribution” to improve its financial performance and also was involved in mergers and acquisitions.
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ICICIdirect.com coverage universe (Pharma)
Biocon Idirect Code MCap BIOCON 7340.0 CMP Target Upside (%) 367 432 18 FY10 FY11E FY12E FY13E Dishman Idirect Code MCap DISHPHA 1420.3 CMP Target Upside (%) 176 168 -5 FY09 FY10 FY11E FY12E IPCA Labs Idirect Code MCap IPCLAB 3896.0 CMP Target Upside (%) 310 325 5 FY10 FY11E FY12E FY13E Piramal Health Idirect Code MCap Sun Pharma Idirect Code MCap SUNPHA 44758.6 CMP Target Upside (%) 436 416 -5 FY09 FY10 FY11E FY12E NICPIR 10032.0 CMP Target Upside (%) 472 NA NA FY09 FY10 3281.1 3671.1 Sales (| Cr) 4271.4 4019.8 5808.6 6844.1 15.1 23.1 EPS (|) 17.6 13.0 16.7 17.7 31.2 20.5 PE(x) 24.8 33.4 26.1 24.7 19.4 15.2 EV/E (x) 23.2 31.0 22.2 20.3 24.0 28.3 RoNW (%) 25.7 17.7 19.0 17.3 17.7 18.8 RoCE (%) 28.3 19.5 20.3 18.1 RoCE (%) 16.4 14.6 18.8 20.1 RoCE (%) 14.8 16.5 17.1 18.3 RoCE (%) 25.7 20.4 24.7 24.7 RoCE (%) 11.5 12.9 15.6 17.9 RoCE (%) 19.8 20.4 17.0 18.0 Sales (| Cr) 2367.8 2800.1 3183.0 3648.0 Sales (| Cr) 1062.4 915.4 911.0 1044.0 Sales (| Cr) 1559.6 1832.7 2171.8 2595.8 Sales (| Cr) EPS (|) 14.7 19.4 20.5 24.0 EPS (|) 18.2 14.6 15.1 16.8 EPS (|) 16.4 19.9 21.4 29.5 EPS (|) PE(x) 25.0 18.9 17.9 15.3 PE(x) 9.7 12.1 11.6 10.5 PE(x) 18.9 15.6 14.5 10.5 PE(x) EV/E (x) 16.4 11.5 10.4 9.0 EV/E (x) 8.0 10.5 10.7 8.4 EV/E (x) 13.4 11.6 9.6 7.2 EV/E (x) RoNW (%) 16.7 18.8 17.2 17.3 RoNW (%) 20.9 15.0 13.8 13.8 RoNW (%) 23.7 23.2 20.6 22.6 RoNW (%) RoCE (%) 15.6 19.9 19.1 19.5 RoCE (%) 13.6 9.1 7.4 9.6 RoCE (%) 20.5 20.3 22.1 24.8 RoCE (%)
Glenmark Sales (| Cr) EPS (|) PE(x) EV/E (x) RoNW (%) ISIEmergingMarketsPDF in-nmimsmum from 122.170.126.130 on 2011-02-17 04:09:50 EST. DownloadPDF. Idirect Code GLEPHA CMP 290 FY10 2093.0 7.7 42.4 24.4 19.4 Target MCap 7836.0 Upside (%) 396 37 FY11E FY12E FY13E Lupin Idirect Code MCap LUPIN 18472.0 CMP Target Upside (%) 420 530 26 FY10 FY11E FY12E FY13E Unichem Labs Idirect Code MCap UNILAB 1768 CMP Target Upside (%) 196 227 16 FY10 FY11E FY12E FY13E Indoco Remedies Idirect Code MCap Opto Circuits Idirect Code Mcap (| cr) OPTCIR CMP Target 4765.0 % Upside 260 329 27% FY09 FY10 FY11E FY12E INDREM 565.0 CMP Target Upside (%) 460 511 11 FY10 FY11E FY12E FY13E 2484.9 2986.7 3454.4 Sales (| Cr) 2500.7 2986.0 3485.7 4118.4 Sales (| Cr) 765.5 843.4 993.3 1149.1 Sales (| Cr) 398.3 486.9 581.1 712.6 Sales (| cr) 818.5 1077.6 1558.6 2267.7 12.2 18.2 21.7 EPS (|) 12.2 18.2 19.9 23.3 EPS (|) 14.7 12.7 18.3 20.6 EPS (|) 34.4 42.0 48.7 63.9 EPS (|) 22.2 14.2 18.3 21.9 26.7 17.8 14.9 PE(x) 23.7 15.9 14.6 12.4 PE(x) 13.3 15.4 10.7 9.5 PE(x) 13.4 11.0 9.4 7.2 PE(x) 11.7 18.3 14.2 11.9 17.4 12.9 10.9 EV/E (x) 15.5 12.0 10.4 9.1 EV/E (x) 9.5 9.0 6.5 6.0 EV/E (x) 11.2 8.4 6.4 5.3 EV/E (x) 20.1 13.3 12.3 9.9 13.9 20.7 20.6 RoNW (%) 14.1 17.7 16.8 17.0 RoNW (%) 23.3 16.9 20.6 19.5 RoNW (%) 13.6 14.6 14.9 16.7 RoNW (%) 26.1 26.0 20.1 21.3
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RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Add, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: 20% or more; Buy: Between 10% and 20%; Add: Up to 10%; Reduce: Up to -10% Sell: -10% or more; Pankaj Pandey Head – Research ICICIdirect.com Research Desk, ICICI Securities Limited, 7th Floor, Akruti Centre Point, MIDC Main Road, Marol Naka, Andheri (East) Mumbai – 400 093 [email protected] ANALYST CERTIFICATION
We /I, Siddhant Khandekar CA- INTER Krishna Kiran Konduri MBA FINANCE research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
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Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. 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Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. 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