Health Care: Biotest AG, Bangkok Dusit Medical Services, Torrent Pharmaceuticals, Cipla Ltd and more

• The offer has been accepted by 96.2% of ordinary shares, 43.24% of the preferred shares and 69.7% of the total share capital. Acceptance for ordinary shares extended to 21 April.
• Grifols is addressing its leverage, although may not distribute cash dividends until 2024. The discount of B shares has tightened to 33.1%. Long GRFS US/short GRF SM.
• Short BIO3 GR, the shares should return to pre-bid levels (around €35/share), although borrow may be tight. Long BIO GR, and put the shares to Grifols (until 21 April).

• Bangkok Dusit Medical Services (BDMS TB) should benefit from Thailand’s resumption of quarantine-free travel from February 1. International patients contributed 30% of total revenue of BDMS in pre-pandemic period.
• With the less severe Omicron variant, BDMS non-COVID revenue is expected to recover. Its revenue and net profit through first nine months of 2021 are still lower than pre-pandemic levels.
• Digitalization initiatives of BDMS will be a stable source of income and long-term growth driver for the company, contributing 10–15% of total revenue in next five years.

TRP’s 3QFY22 performance missed our estimate. The US Generics business remains the major drag on overall performance, with a lack of new approvals and a steep price erosion in the base business. Domestic Formulation (DF) remains in good stead, with healthy better-than-industry performance. The management intends to add medical representatives (MRs) to further strengthen the growth outlook in the DF segment.

CIPLA delivered a better-than-expected 3QFY22 performance, led by robust growth in the Domestic Formulation (DF) segment, steadily improving sales in North America (NA), and better operating leverage. This was partly offset by a momentary slowdown in API sales in the developed markets. We raise our FY22E/FY23E/FY24E EPS estimate by 3%/6%/4%, factoring in a) market share gains in already launched ANDAs and upcoming potential new launches, such as Lanreotide, b) strong growth in anchor consumer brands in India/South Africa, and c) moderation in the API business outlook.