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ICICI Securities Ltd. | Retail Equity Research
September 22, 2017
Monthly Update
Divi’s rallies on early resolution hopes…
In an unprecedented development, the USFDA has initiated post-import
alert plant inspection for Divi’s Laboratories’ Vizag API plant (unit-II) within
just six months. Note that the agency had issued import alert in the month
of March 2017 after its inspection at the fag end of 2016. Post the
inspection; the plant received an import alert from the USFDA. In a normal
course the USFDA post-import alert plant inspection takes place only after a
gap of 15-18 months as was the case with Aurobindo and Ipca. The USFDA
in its latest inspection has issued fresh six form 483 observations. But hopes
for earlier resolution of import alert as well as warning letter has lifted the
investors sentiments in the stock. The management has maintained that the
new observations are procedural in nature and the earlier five observations
have been resolved. Vizag unit II accounts for 60-65% of overall sales of
which US accounts for 30-32% of the pie. The management had earlier
indicated that the total impact of the import alert was just 3-4% of total
sales. However, the main apprehension at the time of import alert was the
threat of loosing clients from custom synthesis business.
On the regulatory front, Cadila’s Ahmedabad manufacturing facility has
received Establishment Inspection Report (EIR) from the USFDA for audit
conducted from January 16 to January 24, 2017. Biocon’s Malaysia plant
has been issued Good Manufacturing Practice (GMP) Compliance status for
its Insulin manufacturing facility by the HPRA (Ireland) as the representative
European inspection authority. .
In another development, the USFDA has give three months extension to
Biocon to take a call on application of its biosimilar drug Trastuzumab, in
order to review some additional information submitted to them as a part of
the application review process. The original target action date was
September 3, 2017.
On the domestic front, The Drug Controller General of India (DGCI) is
planning surprise checks of accredited drug and cosmetic testing
laboratories, to ensure GMP compliance. Secondly, the Government of India
is planning to open 49 cancer centres in India at an estimated cost of | 3495
crore, in 3 years.
Finally, the Indian pharmaceutical market (IPM) witnessed slight recovery in
the month of August amid GST implementation. The market) grew 2.4%
YoY to | 10317 crore in August.
After a long hiatus buying resumes in beaten down Pharma stocks
In the last few days most of the beaten down Pharma stocks have rallied
anywhere between 20 to 50%. Except in the case of Divi’s Labs, the rally is
mainly been driven by bottom fishing. Sharp surge in market liquidity as
well as rally in most of the non-pharma sectors has brought back Pharma’s
status of being defensive to some extent. However, the situation on the
earnings front remains challenging despite improvement in USFDA
approval momentum and clearance for some facilities as the headwinds of
intense competition in existing products and client consolidation in the US
remain strong. Back home the domestic growth, post GST implementation,
has shown a sign of recovery albeit slowly. Hopes are also being built on
FY20 earnings as FY18 and in some cases FY19 slowdown being more or
less in the price. We expect the earnings momentum to normalise (albeit
slowly) on the back of incremental product launches largely on speciality
front in the US besides normalising of Indian formulations growth and
recovery in emerging markets.
Health Check
Health Check
Stocks Performance
Mcap
Company 1M 3M YTD 1Y 21-Sep
Sun Pharma.Inds. 13 -1 -17 -33 124989
Cadila Health. 6 -4 40 28 51182
Cipla 5 9 4 -2 47521
Lupin 12 -5 -30 -33 46795
Aurobindo Pharma 9 15 13 -6 44296
Dr Reddy's Labs 27 -9 -20 -22 40598
Divi's Lab. 58 52 25 -26 26042
Torrent Pharma. 5 10 0 -19 22244
Biocon 11 8 15 16 21852
Glaxosmit Pharma 1 -3 -12 -14 20360
Glenmark Pharma. 7 1 -29 -30 17916
Apollo Hospitals 2 -16 -10 -19 14853
Natco Pharma 12 -17 39 27 14087
Jubilant Life -1 -1 9 10 11023
Ajanta Pharma 8 -19 -30 -37 10940
Syngene Int. 9 5 -14 1 9697
Alembic Pharma -5 -8 -17 -25 9284
Strides Arcolab 9 5 -7 -4 8840
Pfizer -1 -1 -3 -11 8076
Wockhardt 22 13 0 -26 7257
Ipca Labs. 23 7 -5 -15 6361
Unichem Labs. 1 -6 -3 -6 2255
Indoco Remedies 6 11 -21 -38 1905
Return (%)
Market cap in | crore
Global Indices Performance
Company 1M 3M YTD 1Y 3Y 5Y
S&P 500 Pharm Index (US) 5 1 13 8 7 14
NASDAQ Biotechnology (US) 9 5 26 12 7 19
S&P Pharmaceuticals (US) 5 -2 9 -8 -4 10
DJ Pharma and Biotech (US) 8 6 21 13 8 16
DJ STOXX Healthcare (EU) 4 -5 8 4 5 12
TOPIX Pharma Index (Japan) 4 1 5 9 11 17
MSCI World Pharm & Biotech 6 3 19 11 4 13
BI Global Spectalty-Generic Pharm 2 -13 -18 -36 -18 1
NSE Pharma 13 2 -6 -18 -3 12
Return (%)
Research Analyst
Siddhant Khandekar
Mitesh Shah
Harshal Mehta
ICICI Securities Ltd. | Retail Equity Research
Page 2
IPM grew 2.4% YoY in August
The Indian pharmaceutical market (IPM) growth increased 2.4% YoY to
| 10317 crore for August. IPM growth was due to increase in volumes –
1% and new product launches – 2.9%. While price declined by 1.6% in
August
The fixed dosage combination (FDCs) related market de-grew 4.2%,
while the Non FDC market registered a growth of 2.5%
Drugs under NLEM list declined 3.8% to | 1094 crore while non-NLEM
drugs 3.1% to | 8799 crore. Volume grew marginally in NLEM and non-
NLEM at 0.2% and 0.6%, respectively
Among companies under I-direct coverage Cadila, Biocon, Lupin,
Torrent, Ajanta, Sun, Torrent Pharma and Glenmark have registered
higher than industry growth rate
Therapy wise, 15 therapies have shown growth for the month of
August. Notable among them were Anti-Diabetic – 10.6% YoY, Cardiac
– 8.1% and Derma – 12.7%. On the other hand, anti-Infectives declined
8% YoY, Respiratory declined 6.1% and Anti-malaria decline 30.4%.
On a MAT basis, IPM growth was at 8.6% YoY to | 113919 crore
Domestic companies have grown 1.4% YoY while MNC companies
have grown 6.2% in August 2017
Exhibit 1: Domestic formulations - growth trend
[
17.6
13.7
8.9
14.5
6.9 9
.1
6.2
9.6
Apr-17
7.2
5.2
-2.4
2.4
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Aug-16
Sep-1
6
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
(%
)
Source: AIOCD data base, ICICIdirect.com Research
Exhibit 2: Companies growth in domestic market in August, 2017
7.2
-8.3
6.4
16.0
-2.4-0.7
5.5
8.6
-10.7
-19.8
8.9
-15.5
8.7
-3.1
4.05.7
-2.6
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Ajanta
Ale
mbic
Bio
con
Cadila
Cip
la
DR
L
Gle
nm
ark
GS
K P
harm
a
Indoco
Ipca Labs
Lupin
Natco
Novartis
Pfiz
er
Sun P
harm
a
Torrent
Unic
hem
(%
)
Source: AIOCD data base, ICICIdirect.com Research
Therapy wise performance (| crore)
Therapy Aug' 17 Aug' 16 YoY (%) July' 17 MoM (%)
Anti-Infectives 1540 1674 -8.0 1264 21.9
Cardiac 1235 1142 8.1 1161 6.3
GI 1200 1171 2.5 1148 4.6
Anti Diabetic 910 823 10.6 873 4.2
Vitamins 907 891 1.8 847 7.1
Respiratory 747 796 -6.1 596 25.3
Pain 716 715 0.1 636 12.5
Derma 655 581 12.7 584 12.1
Neuro 609 577 5.6 558 9.0
Gynaecological 519 492 5.4 491 5.7
Anti-Neoplastics 214 199 7.6 182 17.9
Vaccines 188 175 7.2 179 4.7
Ophthal 185 174 6.0 172 7.2
Hormones 176 161 9.1 155 13.6
Blood Related 123 112 9.8 123 0.4
Urology 122 113 7.9 114 7.4
Others 110 99 10.9 97 14.0
Sex Stimulants 50 47 7.7 44 15.2
Anti Malarials 62 90 -30.4 44 40.5
Stomatologicals 49 45 9.1 45 8.8
Source: AIOCD data base
Top brands in Indian pharma market (MAT; | crore)
Brand Company Therapy Aug' 17 YoY (%)
Mixtard Abbott Anti Diabetic 510.0 6.3
Spasmo Proxyvon PlusWOCKHARDTGI 435.0 36.1
Glycomet Gp Usv Anti Diabetic 432.0 22.0
Galvus Met Novartis Anti Diabetic 377.0 27.6
Lantus Sanofi India Anti Diabetic 353.0 28.5
Janumet MSD Anti Diabetic 326.0 27.1
Augmentin GSK GI 308.0 4.2
Liv 52 Himalaya Anti-Infectives 302.0 9.2
Novomix Abbott Anti-Infectives 282.0 38.3
Clavam Alkem Anti-Infectives 275.0 2.4
Source: AIOCD data base
Industry Acute vs Chronic vs Sub Chronic
Acute
48%
Chronic
32%
Sub
Chronic
20%
Source: AIOCD data base; As per AIOCD MAT July 2017
ICICI Securities Ltd. | Retail Equity Research
Page 3
Domestic Formulations – I-Direct Coverage universe data summary
Exhibit 3: Domestic formulations – Market Share (MAT Value August-17)
[
8.5%
4.6% 4.4%
3.3%
2.4% 2.3% 2.2%
1.4% 1%0.8% 0.8% 0.7% 0.6%
0.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Sun
Cip
la
Cadila
Lupin
Gle
nm
ark
Torrent
Dr. R
eddys
IPCA
Ale
mbic
Natco
Cadila
Indoco
Ajanta
Bio
con
Market Share
Market Share
Source: AIOCD data base, ICICIdirect.com Research
Exhibit 4: Acute vs Chronic vs Sub Chronic (MAT Value August-17)
39
56
19
4452
42
81
65
31
88
39
2233
51
5124
74
43 28
35
628
51
0
47
53
6131
1020
7 1320 23
137
1812 14
25
618
0
20
40
60
80
100
120
Aja
nta
Ale
mbic
Bio
con
Cip
la
Dr. R
eddys
Gle
nm
ark
Indoco
IPC
A
Lupin
Natco
Sun
Torrent
Unic
hem
Cadila
%
Acute Chronic Sub Chronic
Source: AIOCD data base, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 4
Exhibit 5: Top five brands in Value terms (MAT Value August-17)
[5
Sun Brand Therapy Sales (|cr)
1 Volini Pain 237
2 Istamet Anti Diabetic 224
3 Rosuvas Cardiac 219
4 Gemer Anti Diabetic 201
5 Levipil Neuro 184
Cipla Brand Therapy Sales (|cr)
1 Foracort Respiratory 234
2 Duolin Respiratory 183
3 Seroflo Respiratory 152
4 Asthalin Respiratory 141
5 Budecort Respiratory 139
Cadila Brand Therapy Sales (|cr)
1 Skinlite Derma 191
2 Deriphyllin Respiratory 117
3 Mifegest Kit Gynaecological 117
4 Pantodac GI 113
5 Atorva Cardiac 107
Lupin Brand Therapy Sales (|cr)
1 Gluconorm-G Anti Diabetic 192
2 Budamate Respiratory 105
3 Tonact Cardiac 92
4 Supradyn Vitamins 66
5 Falcigo Anti Malarials 55
Torrent Brand Therapy Sales (|cr)
1 Shelcal Vitamins 185
2 Storvas Cardiac 110
3 Nikoran Cardiac 97
4 Digene GI 88
5 Nebicard Cardiac 80
Dr. Reddys Brand Therapy Sales (|cr)
1 Omez GI 112
2 Omez D GI 104
3 Prega News Others 69
4 Econorm GI 69
5 Razo D GI 64
Glenmark Brand Therapy Sales (|cr)
1 Telma Cardiac 175
2 Telma H Cardiac 170
3 Ascoril Plus Respiratory 117
4 Candid Derma 110
5 Candid-B Derma 95
IPCA Brand Therapy Sales (|cr)
1 Zerodol Sp Pain 122
2 Zerodol P Pain 94
3 Hcqs Anti Malarials 85
4 Larinate Anti Malarials 58
5 Glycinorm M Anti Diabetic 48
Alembic Brand Therapy Sales (|cr)
1 Azithral Anti-Infectives 145
2 Roseday Cardiac 75
3 Ascoril Ls Respiratory 57
4 Ensure Vitamins 56
5 Feronia Xt Gynaecological 49
Unichem Brand Therapy Sales (|cr)
1 Montair Lc Respiratory 102
2 Montaz Anti-Infectives 74
3 Ampoxin Anti-Infectives 69
4 Unienzyme GI 62
5 Librax GI 33
Natco Brand Therapy Sales (|cr)
1 Hepcinat Anti-Infectives 203
2 Geftinat Anti-Neoplastics 145
3 Corex Respiratory 100
4 Erlonat Anti-Neoplastics 95
5 Dytor Cardiac 87
Indoco Brand Therapy Sales (|cr)
1 Febrex Plus Respiratory 80
2 Cyclopam GI 47
3 Histac GI 45
4 Sensodent-K Stomatologicals 38
5 Budesal Respiratory 35
Ajanta Brand Therapy Sales (|cr)
1 Met Xl Cardiac 83
2 Atorfit Cv Cardiac 51
3 Amlong Cardiac 48
4 Cifran Ct GI 23
5 Trapic Mf Blood Related 22
Biocon Brand Therapy Sales (|cr)
1 Insugen Anti Diabetic 103
2 Basalog Anti Diabetic 73
3 Viagra Sex Stimulants 33
4 Esgipyrin Pain 30
5 Gemcal Plus Vitamins 22
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 5
Exhibit 6: Top five Therapies in Value term (MAT Value August-17)
[5
Sun Therapy Sales (|cr)
1 Anti-Infectives 972
2 Cardiac 1851
3 GI 1137
4 Anti Diabetic 931
5 Vitamins 383
Cipla Therapy Sales (|cr)
1 Anti-Infectives 1239
2 Cardiac 658
3 GI 396
4 Anti Diabetic 88
5 Vitamins 75
Cadila Therapy Sales (|cr)
1 Anti-Infectives 764
2 Cardiac 693
3 GI 559
4 Anti Diabetic 84
5 Vitamins 214
Lupin Therapy Sales (|cr)
1 Anti-Infectives 673
2 Cardiac 930
3 GI 311
4 Anti Diabetic 558
5 Vitamins 183
Torrent Therapy Sales (|cr)
1 Anti-Infectives 81
2 Cardiac 774
3 GI 410
4 Anti Diabetic 199
5 Vitamins 370
Dr. Reddys Therapy Sales (|cr)
1 Anti-Infectives 195
2 Cardiac 351
3 GI 535
4 Anti Diabetic 174
5 Vitamins 74
Glenmark Therapy Sales (|cr)
1 Anti-Infectives 375
2 Cardiac 614
3 GI 98
4 Anti Diabetic 173
5 Vitamins 55
IPCA Therapy Sales (|cr)
1 Anti-Infectives 97
2 Cardiac 270
3 GI 122
4 Anti Diabetic 85
5 Vitamins 38
Alembic Therapy Sales (|cr)
1 Anti-Infectives 320
2 Cardiac 220
3 GI 186
4 Anti Diabetic 111
5 Vitamins 115
Unichem Therapy Sales (|cr)
1 Anti-Infectives 151
2 Cardiac 424
3 GI 113
4 Anti Diabetic 58
5 Vitamins 23
Natco Therapy Sales (|cr)
1 Anti-Infectives 406
2 Cardiac 1
3 GI 0
4 Anti Diabetic 0
5 Respiratory 0
Indoco Therapy Sales (|cr)
1 Anti-Infectives 136
2 Cardiac 10
3 GI 108
4 Anti Diabetic 30
5 Vitamins 58
Ajanta Therapy Sales (|cr)
1 Anti-Infectives 15
2 Cardiac 274
3 GI 14
4 Anti Diabetic 15
5 Vitamins 30
Biocon Therapy Sales (|cr)
1 Anti-Infectives 11
2 Cardiac 16
3 GI 3
4 Anti Diabetic 237
5 Vitamins 1
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 6
Exhibit 7: Summary of USFDA approvals for August, 2017
[5
Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size
Cadila Healthcare Memantine Hydrochloride CNS Forest Labs Namenda US$ 1 billion
Cipla Nevirapine Anti-Retroviral Boehringer Ingelheim Viramune NA
Jubilant Lifesciences Tizanidine Hydrochloride Pain Management Acorda Zanaflex NA
Sun Pharma Albuterol Sulfate And Ipratropium Bromide Respiratory Boehringer Ingelheim Combivent NA
Cadila Healthcare Diltiazem Hydrochloride Anti-Hypertension Valeant International Cardizem Cd NA
NATCO PHARMA Lanthanum Carbonate GI Shire Llc Fosrenol US$ 122 million
Cadila Healthcare Azelastine Hydrochloride Respiratory Medpointe Pharm Hlc Astelin NA
Cadila Healthcare Hydrochlorothiazide; Telmisartan Hypertension Boehringer Ingelheim Micardis Plus NA
Cadila Healthcare Pindolol Hypertension Novartis Visken US$ $84 million
Glenmark Pharma Triamcinolone Acetonide Dermatology Mylan Triamcinolone Acetonide CreamUS$ 4.4 million
Cadila Healthcare Ziprasidone Hydrochloride Capsules Anti-Psychotic Pfizer Geodon NA
Cadila Healthcare Candesartan Cilexetil Anti-Hypertension Astrazeneca Atacand NA
Jubilant Lifesciences Indomethacin Anti-Inflammatory Iroko Pharma Tivorbex NA
Aurobindo Pharma Ezetimibe Obesity Merck Zetia US$2.7 billion
Ajanta Pharma Eletriptan Hydrobromide Pain Management Pfizer Relpax NA
Cadila Healthcare Aspirin; Dipyridamole CVS Boehringer Ingelheim Aggrenox NA
Cadila Healthcare Donepezil Hci CNS Eisai Inc. Aricept US$ 52 million
Cadila Healthcare Mycophenolate Mofetil Tablets Immuno Suppressant Roche Cellcept NA
Ajanta Pharma Entacapone CNS Orion Pharma Comtan NA
Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size
Sun Pharma Adapalene; Benzoyl Peroxide Anti-Bacterial Galderma Labs Epiduo NA
Cadila Healthcare Abacavir;Lamivudine Tablets HIV Viiv Healthcare Epzicom NA
Cadila Healthcare Mesalamine Suppositories GI NA NA NA
Alembic Pharma Asenapine CNS Forest Labs Saphris NA
Ajanta Pharma Solifenacin Succinate Urology Astellas Pharma Vesicare US$ 1.1 billion
Aurobindo Pharma Dolutegravir; Lamivudine; Tenofovir Disoproxil Fumarate HIV NA NA NA
Cipla Arformoterol Tartrate Respiratory Sunovion PharmaceuticalsBrovana NA
Tentative Approvals
ICICI Securities Ltd. | Retail Equity Research
Page 7
Exhibit 8: US Patent litigations [5
Month Innovator ANDA Filer Brand Name API Used for
Apr-17 BMS ; Pfizer Aurobindo ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Lupin ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Torrent Pharma ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Unichem ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Dr. Reddy's Lab ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Indoco Remedies ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Sun Pharma ELIQUIS apixaban Anticoagulant
Apr-17 BMS ; Pfizer Cadila Healthcare ELIQUIS apixaban Anticoagulant
Apr-17 Celgene Corp Cadila Healthcare REVLIMID lenalidomide Oncology
Apr-17 Elli Lilly Dr. Reddy's Lab CIALIS tadalafil erectile dysfunction
Apr-17 Millenium Pharma Cadila Healthcare REVLIMID lenalidomide Oncology
Apr-17 Bayer Pharma Taro Pharma Xarelto Rivaroxaban Blood Thinner
Apr-17 Bayer Pharma Aurobindo Pharma Xarelto Rivaroxaban Blood Thinner
May-17 Takeda Pharma Torrent Pharma Nesina Alogliptin Diabetes
May-17 Takeda Pharma Glenmark Qudexy XR Topiramate Epilepsy
Jun-17 Allergan Taro Pharma Aczone Dapsone Leprosy
Jun-17 Genentech Sun Pharma Tarceva Erlotinib Cancer
Jun-17 Bayer AG Alembic Pharma Xarelto Rivaroxaban Blood Thinner
Jun-17 Teva Dr Reddy's Lab Copaxone Glatiramer Multiple Sclerosis
Jun-17 Valeant Pharma Sun Pharma Uceris Budesonide Ulcerative Colitis
Jun-17 Omeros Corp Lupin Omidria Phenylephrine And Ketorolac Pupil Dilation
Jun-17 Amgen Lupin Sensipar Cinacalcet Calcium Reducer
Jun-17 Biogen Aurobindo Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Sun Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Cipla Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Glenmark Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Lupin Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Forest Laboratories Sun Pharma Linzess Linaclotide Irritable Bowel Syndrome
Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jun-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jul-17 Janssen Pharma Aurobindo Pharma Invokana Canagliflozin Diabetes
Jul-17 Actelion Pharma Sun Pharma Veletri Epoprostenol Pulmonary Arterial Hypertension
Jul-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis
Jul-17 Delcor Asset Corp Sun Pharma Evoclin Clindamycin Acne vulgaris
Jul-17 Celgene Corp Dr Reddy's Lab Revlimid Lenalidomide Oncology
Jul-17 PreCision Dermatology Lupin Locoid Hydrocortisone butyrate Dermatitis
Jul-17 BMS Cadila healthcare Reyataz Atazanavir HIV
Jul-17 Endo Pharma Lupin Nascobal Cyanocobalamin Vitamin B12 deficiency
Jul-17 Bayer Sun Pharma Aczone Clindamycin Acne vulgaris
Aug-17 Bayer AG Lupin Xarelto Rivaroxaban Blood Thinner
Aug-17 Horizon Therapeutics Lupin Ravicti Glycerol Phenylbutyrate Inborn Urea Cycle Disorder
Aug-17 Celgene Cipla Revlimid Lenalidomide Oncology
Aug-17 Kissei Pharmaceuticals Aurobindo Rapaflo Silodosin Enlarged Prostate
Aug-17 Bayer AG Torrent Pharma Xarelto Rivaroxaban Blood Thinner
Aug-17 Forest Laboratories Aurobindo Linzess Linaclotide Irritable Bowel Syndrome
Aug-17 Alcon Research Cipla Pazeo Olopatadine Ocular Itching
Aug-17 Sanofi-Aventis Aurobindo Multaq Dronedarone Atrial Fibrillation
Aug-17 Janssen Products LP Aurobindo Prezista Darunavir Hiv
Aug-17 Allergan Aurobindo Lastacaft Alcaftadine Allergic Conjunctivitis
Source: Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 8
Monthly Sector News
M&As, Demergers, Tie-ups and JVs
Alembic sells Baddi facility
Alembic Pharma has sold its formulations manufacturing facility at Baddi
(H.P.) to Scott Edil Pharmacia Limited. As per the management, revenue
contribution and net-worth of this manufacturing facility was insignificant in
FY17
Jubilant Life completes Triad acquisition
Jubilant life has completed acquisition of radio pharmacy business Triad
Isotopes (US). The acquisition was funded through company’s internal
accruals
Cadila Healthcare ties up with Pharm-Aid in Russia
Cadila Healthcare has tied up with Pharm-Aid to get the technology of
chicken pox vaccine and gain access to the public and private market
segments in the Russian Federation, Belarus, Uzbekistan, Kazakhstan,
Armenia and Kyrgyzstan
Price hikes, new launches, recalls, approvals
Cadila Healthcare faces increasing competition in Lialda
As per media sources, Shire Plc has launched its Authorised Generic (AG)
version of Lialda (GI). Cadila had launched this drug in US markets in July,
2017 and hence, increased competition is expected for the drug.
Lawsuits, court rulings, settlements, regulatory issues
Indian Law ministry cites legal limitations in curbing unethical drug practises
As per media sources, Government of India’s plan to curb unethical
practises in country’s drug industry faces indefinite delay after it has been
rejected by the law ministry citing limitations of current legal framework in
the current format
Sun Pharma Halol plant clears MHRA inspection
As per media sources, Sun pharma's Halol plant has received clearance
from the UK’s pharma regulatory body (MHRA)
Glenmark’s Indore facility clears USFDA inspection
As per media sources, Glenmark's Indore plant has received zero form 483
observations from the USFDA, in response to USFDA inspection at the plant
which lasted for a week. Glenmark manufactures oral solids at its Indore
facility for US market
Biocon receives USFDA extension on a biosimilar application
Biocon has been given three months extension by the USFDA to take a
decision on the application of its biosimilar drug Trastuzumab, in order to
review some additional information submitted to them as a part of the
application review process. The original target action date was September
3, 2017
Cadila’s Ahmedabad facility receives USFDA clearance
Cadila’s Ahmedabad manufacturing facility has received EIR from the
USFDA for audit conducted from January 16, 2017 to January 24, 2017
Biocon’s Mayasia plant receives cGMP compliance from HPRA
Biocon’s Malaysia plant has been issued a GMP Compliance for its Insulins
manufacturing facility by the HPRA (Ireland) as the representative European
inspection authority. Biocon's Malaysia facility was inspected by the EMA in
April 2017
ICICI Securities Ltd. | Retail Equity Research
Page 9
Cadila’s Moriaya plant clears USFDA inspection
Cadila’s Moraiya plant has been issued zero form 483 observations by the
USFDA, as a response to its inspection carried out from 31st August 2017 to
7th September, 2017
Dr Reddy’s plant receives observations from the Germany authority
Dr Reddy’s has received six observations at its Duuvada formulations facility
(Oncology) by the regulatory authority of Germany. The company has
described the observations as major but not critical. The plant is not
currently exporting any product to the EU
Aurobindo receives VAI status for Unit IV and 2 observations for Unit VI
Aurobindo Pharma has received Voluntary Action Indicated (VAI) status
from USFDA for its Unit IV plant, in response to the seven observations
received for the plant during USFDA April 20-28th inspection. USFDA has
also issued two observations to Unit VI plant during its inspection from
August 28- Sept 1, 2017. The regulator found no written procedures for
production and process controls
Dr Reddy’s UK plant receives USFDA observations
Dr Reddy's Mirfield plant (API facility) in UK has received 3 form 483
observations from the USFDA. The management has not disclosed the
nature of the observations
USFDA completes inspection of Divi’s Lab Unit 2
Divi’s Lab unit 2 has received six form 483 observations from the USFDA.
As per the management, the inspection was for cGMP and verification of
corrective actions against previous five observations raised by the USFDA.
The management has also clarified that the six new observations are
procedural in nature
Others
Dr Reddy’s out-licenses its Derma candidate to Encore Dermatology
Dr Reddy’s wholly owned subsidiary, Promius Pharma, has out-licensed the
future development, manufacturing, and commercialisation rights of DFD-06
(Dermatology), to Encore Dermatology. Promius Pharma is eligible to
receive certain pre- and post-commercialisation milestone payments of up
to US$ 32.5 million, followed by fixed royalty payments on net sales
Lupin’s drugs list on Japanese National Health Insurance
Lupin’s Japanese subsidiary has announced listing of NHI (National Health
Insurance) drug price for its generic drug Quetiapine fumarate ER tablet
(CNS). NHI drug price: 71.00 Yen (| 41.1) per 50mg tablet, 188.60 Yen (|
109.2) per 150mg tablet
DGCI plans surprise quality checks
The Drug Controller General of India (DGCI) is planning surprise checks of
accredited drug and cosmetic testing laboratories, to ensure GMP
compliance. A central team will jointly inspect these facilities along with the
state machinery
Biocon receives funding for its oral insulin candidate study
Biocon will get funding from Juvenile Diabetes Research Centre (JDRF) for
its global study of oral Insulin drug candidate to evaluate the safety and
tolerability in people with type 1 diabetes
Government of India to set up cancer centres across the country
Government of India is planning to open 49 cancer centres (in addition of
already operational 31 centres) in India at an estimated cost of 3495 crore,
ICICI Securities Ltd. | Retail Equity Research
Page 10
in 3 years. The 49 cancer centres will be initially set up under two categories
— state cancer institutes and tertiary care cancer centres (TCCCs) in a
phased manner — they will be responsible for building capacities of other
institutions below for prevention, control, diagnosis and treatment.
Exhibit 9: One year forward P/E of NSE Pharma vs. Nifty
[
0.0
10.0
20.0
30.0
40.0
50.0
9/21/2011
3/21/2012
9/21/2012
3/21/2013
9/21/2013
3/21/2014
9/21/2014
3/21/2015
9/21/2015
3/21/2016
9/21/2016
3/21/2017
9/21/2017
x
NSE Pharma Nifty
26% Premium
Source: Bloomberg, ICICIdirect.com Research
ICICIdirect.com coverage universe (Healthcare)
Company I-Direct CMP TP Rating M Cap
Code (|) (|) (| Cr) FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Ajanta Pharma AJAPHA 1243 1,420 Buy 10939.8 110.0 56.6 57.1 71.0 11.3 22.0 21.8 17.5 46.2 41.8 33.1 32.4 37.3 33.2 26.5 26.0
Alembic Pharma ALEMPHA 492 570 Hold 9275.0 38.2 21.2 19.1 28.6 12.9 23.2 25.7 17.2 52.2 25.3 18.7 23.9 45.1 21.0 16.5 20.8
Apollo Hospitals APOHOS 1066 1,180 Hold 14832.1 13.2 15.9 7.6 19.7 80.8 67.1 140.5 54.1 6.6 6.0 6.0 8.9 5.3 6.0 2.8 6.8
Aurobindo Pharma AURPHA 756 745 Hold 44292.7 33.9 38.8 46.8 41.4 22.3 19.5 16.2 18.3 23.1 24.4 25.5 19.6 27.2 24.2 22.9 17.1
Biocon BIOCON 364 380 Hold 21840.0 7.7 11.0 7.8 13.5 47.2 33.2 46.8 27.0 9.3 11.9 10.1 15.9 11.5 13.6 9.0 13.9
Cadila Healthcare CADHEA 500 440 Hold 51212.7 15.0 14.5 19.3 22.0 33.5 34.4 25.9 22.8 24.9 13.1 17.2 19.2 34.4 21.4 23.4 22.2
Cipla CIPLA 592 525 Hold 47641.4 18.5 12.5 21.3 26.2 32.0 47.2 27.8 22.6 11.8 7.7 12.5 14.2 12.9 8.0 12.3 13.5
Divi's Lab DIVLAB 979 665 Hold 26001.3 41.5 39.3 34.6 41.5 23.6 24.9 28.3 23.6 31.0 25.0 20.3 21.4 25.7 19.5 15.4 16.3
Dr Reddy's Labs DRREDD 2466 2,400 Hold 40884.3 141.4 70.6 72.4 126.2 17.4 34.9 34.1 19.5 15.3 6.1 6.8 11.9 19.2 9.5 9.0 13.9
Glenmark Pharma GLEPHA 635 730 Hold 17914.9 32.2 46.0 38.7 40.6 19.7 13.8 16.4 15.6 16.2 18.9 15.9 15.5 21.2 25.5 17.9 15.9
Indoco Remedies INDREM 205 180 Hold 1889.1 9.4 8.4 4.9 12.1 21.8 24.5 42.1 16.9 12.9 8.4 5.5 12.0 14.8 12.0 6.6 14.5
Ipca Laboratories IPCLAB 509 410 Hold 6416.5 7.4 15.4 12.6 25.5 68.9 33.0 40.3 19.9 4.5 8.7 6.8 12.4 4.1 7.9 6.2 11.3
Jubilant Life JUBLIF 692 845 Buy 11023.8 26.0 36.1 44.3 59.1 26.6 19.2 15.6 11.7 12.0 13.3 14.8 17.6 14.2 16.8 17.3 19.0
Lupin LUPIN 1035 1,070 Hold 46756.5 50.4 56.6 41.4 53.4 20.5 18.3 25.0 19.4 17.8 16.6 12.4 15.5 20.3 18.9 12.4 14.2
Natco Pharma NATPHA 809 955 Hold 14103.2 9.0 27.0 26.6 16.0 89.5 30.0 30.5 50.5 16.0 33.0 28.3 16.1 12.2 28.8 23.3 12.7
Sun Pharma SUNPHA 522 445 Hold 125240.7 23.4 29.0 14.8 20.3 22.3 18.0 35.2 25.7 18.6 19.8 9.8 12.4 18.0 19.0 9.2 11.4
Syngene Int. SYNINT 484 490 Hold 9680.0 11.1 14.3 14.3 17.4 43.6 33.6 33.6 27.7 14.1 16.8 16.2 17.8 21.6 20.3 17.2 17.4
Torrent Pharma TORPHA 1316 1,250 Hold 22276.5 110.9 55.2 48.3 65.8 11.9 23.9 27.2 20.0 46.5 18.9 17.6 20.7 53.7 21.5 16.5 19.2
Unichem Lab UNILAB 249 235 Hold 2259.3 12.3 12.0 12.2 19.4 20.2 20.7 20.4 12.8 13.8 11.8 10.7 15.7 11.7 10.2 9.5 13.5
RoE (%)EPS (|) PE(x) RoCE (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd. | Retail Equity Research
Page 11
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notional target price is defined as the analysts' valuation for a stock.
Sector view:
Over weight compared to index
Equal weight compared to index
Under weight compared to index
Index here refers to BSE 500
Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk,
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ICICI Securities Ltd. | Retail Equity Research
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