Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>Indian pharmaceutical companies started FY24 on a strong note. Due to better pricing environment, drug shortages, and new launches, sector heavyweights reported double-digit revenue growth from U.S. business.</li>
<li>Price erosion has come down to high single-digit from their peak of mid-teens. Despite the rise in number of ANDA approvals from the US FDA, Indian companies continued their dominance.</li>
<li>Indian pharmaceutical companies have accelerated the filing pace. With shorter timeline of approval, the companies are witnessing a spike in number of approvals. Regulatory risk remains the main downside risk.</li>
</ul>


Indian pharmaceutical companies started FY24 on a strong note. Due to better pricing environment, drug shortages, and new launches, sector heavyweights reported double-digit revenue growth from U.S. business.
Price erosion has come down to high single-digit from their peak of mid-teens. Despite the rise in number of ANDA approvals from the US FDA, Indian companies continued their dominance.
Indian pharmaceutical companies have accelerated the filing pace. With shorter timeline of approval, the companies are witnessing a spike in number of approvals. Regulatory risk remains the main downside risk.


Indian Generic Pharmaceutical Companies: US Momentum to Continue Amid Favorable Sector Tailwinds

Equity Bottom-Up

Alkem Laboratories Ltd / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/alkem-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:26928:1" rel="noopener">Alkem Laboratories Ltd (ALKEM IN)</a> is flying high on strong Q2 numbers. The shares rallied 23% since the company announced Q2FY24 result in early November, widely outperforming Nifty Pharma index.</li>
<li>In Q2FY24, revenue grew 12% YoY, and gross margin expanded 380bps to 61.4% backed by lower raw material cost and lower intensity of price erosion in US market.</li>
<li>For the U.S. business, Alkem is looking at high-single-digit growth in dollar terms for FY24. The company has reiterated FY24 gross margin guidance at 59.0–59.5%.</li>
</ul>



Alkem Laboratories Ltd (ALKEM IN) is flying high on strong Q2 numbers. The shares rallied 23% since the company announced Q2FY24 result in early November, widely outperforming Nifty Pharma index.
In Q2FY24, revenue grew 12% YoY, and gross margin expanded 380bps to 61.4% backed by lower raw material cost and lower intensity of price erosion in US market.
For the U.S. business, Alkem is looking at high-single-digit growth in dollar terms for FY24. The company has reiterated FY24 gross margin guidance at 59.0–59.5%.


Alkem Laboratories Ltd (ALKEM IN): Further Upside on Card on US Business and Margin Improvement

<ul>
<li>In Q2FY24, <a href="https://www.smartkarma.com/entities/ipca-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:15774:1" rel="noopener">Ipca Laboratories (IPCA IN)</a> reported 10% growth in domestic formulation business, driven by 12% growth in pain management. In FY24, domestic formulation is expected to growth 12–14%.  </li>
<li>Ipca now holds 52.67% stake in <a href="https://www.smartkarma.com/entities/unichem-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:8267:1" rel="noopener">Unichem Laboratories (UL IN)</a>. Ipca is confident to clock revenue of INR1.7–1.8B and EBITDA of INR300M from Unichem within two years of acquisition.</li>
<li>As facilities are back onstream, Ipca is augmenting the supply chain and revalidating of all the formulations and updating them. Shipment to the U.S. may begin in Q1FY25.</li>
</ul>


In Q2FY24, Ipca Laboratories (IPCA IN) reported 10% growth in domestic formulation business, driven by 12% growth in pain management. In FY24, domestic formulation is expected to growth 12–14%.  
Ipca now holds 52.67% stake in Unichem Laboratories (UL IN). Ipca is confident to clock revenue of INR1.7–1.8B and EBITDA of INR300M from Unichem within two years of acquisition.
As facilities are back onstream, Ipca is augmenting the supply chain and revalidating of all the formulations and updating them. Shipment to the U.S. may begin in Q1FY25.


Ipca Laboratories (IPCA IN): Stellar Domestic Performance; US Business Poised for Scaling Up

Torrent Pharmaceuticals / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/torrent-pharmaceuticals-ltd" target="_blank" data-smartkarma-citation="entities:15762:1" rel="noopener">Torrent Pharmaceuticals (TRP IN)</a> reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.</li>
<li>EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.</li>
<li>Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.</li>
</ul>



Torrent Pharmaceuticals (TRP IN) reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.
EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.
Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.


Torrent Pharmaceuticals (TRP IN): Q2FY24 Result- Domestic Business Continued Solid Growth Path

Dr. Reddy's Laboratories / Equity Bottom-Up

<ul>
<li>Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.</li>
<li>Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.</li>
<li>Despite increase in SG&amp;A and R&amp;D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.</li>
</ul>


Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.
Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.
Despite increase in SG&amp;A and R&amp;D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.


Dr. Reddy's Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets

India

Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals.  The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments.

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Zydus Lifesciences Ltd (ZYDUSLIF IN)

Indian Generic Pharmaceutical Companies: US Momentum to Continue Amid Favorable Sector Tailwinds

Indian pharma companies saw strong U.S. revenue growth in H1FY24 due to better pricing, drug shortages, and new launches. With robust pipeline and...

Tina Banerjee

Alkem Laboratories Ltd (ALKEM IN): Further Upside on Card on US Business and Margin Improvement

Alkem is looking at high-single-digit growth in dollar terms from US business in FY24. FY24 gross margin guidance is 59.0–59.5%, backed by lower...

Tina Banerjee

Ipca Laboratories (IPCA IN): Stellar Domestic Performance; US Business Poised for Scaling Up

In Q2FY24, Ipca reports 10% growth in domestic formulation business and expects 12-14% growth in FY24, riding on the strength of pain management...

Tina Banerjee

Torrent Pharmaceuticals (TRP IN): Q2FY24 Result- Domestic Business Continued Solid Growth Path

Torrent reported 16% revenue growth in Q2, led by India, where outperformance continued due to strong growth in chronic therapies, gastro demand...

Tina Banerjee

Dr. Reddy's Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets

Revenue increased 9% YoY to INR69B, beating street’s expectation of INRINR68, driven by double-digit growth North America and Europe. Net profit...

Tina Banerjee

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Indian Generic Pharmaceutical Companies: US Momentum to Continue Amid Favorable Sector Tailwinds

​Indian pharma companies saw strong U.S. revenue growth in H1FY24 due to better pricing, drug shortages, and new launches. With robust pipeline and...

Tina Banerjee

Alkem Laboratories Ltd (ALKEM IN): Further Upside on Card on US Business and Margin Improvement

Alkem is looking at high-single-digit growth in dollar terms from US business in FY24. FY24 gross margin guidance is 59.0–59.5%, backed by lower...

Tina Banerjee

Ipca Laboratories (IPCA IN): Stellar Domestic Performance; US Business Poised for Scaling Up

​In Q2FY24, Ipca reports 10% growth in domestic formulation business and expects 12-14% growth in FY24, riding on the strength of pain management...

Tina Banerjee

Torrent Pharmaceuticals (TRP IN): Q2FY24 Result- Domestic Business Continued Solid Growth Path

​Torrent reported 16% revenue growth in Q2, led by India, where outperformance continued due to strong growth in chronic therapies, gastro demand...

Tina Banerjee

Dr. Reddy's Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets

Revenue increased 9% YoY to INR69B, beating street’s expectation of INRINR68, driven by double-digit growth North America and Europe. Net profit...

Tina Banerjee

Indian pharma companies saw strong U.S. revenue growth in H1FY24 due to better pricing, drug shortages, and new launches. With robust pipeline and...

In Q2FY24, Ipca reports 10% growth in domestic formulation business and expects 12-14% growth in FY24, riding on the strength of pain management...

Torrent reported 16% revenue growth in Q2, led by India, where outperformance continued due to strong growth in chronic therapies, gastro demand...