fdc ltd 13 22 19 14 3491 health check suven life -5 -1 20...
TRANSCRIPT
ICIC
I S
ecurit
ies –
Retail E
quit
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esearch
Monthly
Sector U
pdate
December 12, 2019
Health Check
Hospitals in focus; Biocon launches Trastuzumab…
In the last three to four years, with many frontline large cap pharma
companies being hampered by structural US related & other issues, we have
seen growing investors’ preference for healthcare services providers. Some
peculiar factors responsible for growing interest in the hospitals space are:
1) waning high capex episodes of private hospitals after the 2008-18 capex
cycle, 2) shifting focus towards assets light model for most hospital players,
3) improving financial matrix, 4) government’s endeavour to bring private
players on board in the wake of the holistic view of universal and affordable
healthcare (themes like NHP 2017 and Ayushman Bharat), 5) India’s
emergence as the destination for medical tourism and 6) the underserved
situation of Indian hospitals compared to the growing needs and
demographic changes well documented by new and existing players. To
capture the potential, we have come up with a thematic report on hospitals
initiating coverage on Aster DM (BUY), Healthcare Global (HOLD) and Shalby
(HOLD) besides reiterating BUY on both Apollo Hospitals and Narayana
Hrudayalaya (please click for detailed report).
On the US launches front, Biocon-Mylan have launched Ogivri, oncology
biosimilar of Roche's Herceptin (Trastuzumab) in the US. The drug had
annual sales of US$2.9 billion in FY18. This is the second biosimilar launched
by Biocon-Mylan in the US.
In another major development, Suven Life’s SUVN-502 (Masupirdine) phase
2a study for Alzheimer’s disease failed to meet its pre-specified primary
endpoint in proof of concept (POC) study. This is a major setback on this
flagship drug. Nonetheless, the future financial impact may be minimal
mainly because the company has already expensed R&D cost in P&L.
On the regulatory front, the USFDA has classified Ipca Labs' formulations
facility at Piparia, Silvassa as official action indicated (OAI). The facility had
received three observations after the cGMP inspection conducted from
August 19-23 by USFDA. We do not expect any material impact of the OAI
status on current operations.
The Indian pharmaceutical market (IPM) grew 14.5% YoY to | 12624 crore
in November 2019. The growth was attributable to volume: 5.9% (highest in
last 17 months), price hike: 5.7%, and new launches: 3% (highest in last 16
months). On a MAT basis, IPM growth was 9.8% YoY to | 139144 crore.
Financials normalising but stock specific approach remains…
The US generics narrative in the last few quarters is reflecting some sort of
normalcy on the back of a stability in the base business performance and
new launches besides rationalisation of unviable products. However, a
sudden increase in USFDA scrutiny has once again put US-heavy companies
under pressure. Domestic formulations are volatile on a monthly basis but
are showing a steady performance on an annual basis. Profitability is likely
to improve as the management commentary continues to suggest
rationalisation of R&D and other related expenses, MR optimisation and
concentrated focus on marketing costs for specialty and biosimilars.
Chinese raw material sourcing, besides improving operating leverage, are
also likely to contribute to margin expansion. Similarly, the companies are
moderating their capex plans to focus on better RoCE. Financially, things are
looking much stable. However, resurfacing of regulatory issues raised by the
USFDA and looming generic generics threat in the domestic formulations
would continue to weigh on sentiments. In this backdrop, we continue to
maintain a stock specific approach. MNCs, CRAMs players and hospitals are
our preferred picks in the healthcare segment.
Stock Performance
Mcap
Company 1M 3M YTD 1Y 12-Dec
Sun Pharma.Inds. 3 2 1 1 104416
Divi's Lab. 7 11 24 20 48660
Dr Reddy's Labs 4 5 11 13 48453
Cipla 2 -1 -11 -13 37223
Biocon 11 26 -7 -8 35100
Lupin 2 -1 -11 -9 33973
Torrent Pharma. 4 9 6 6 31650
Cadila Health. 15 11 -24 -25 27165
Abbott 8 29 68 68 26819
Aurobindo Pharma 3 -28 -39 -39 26408
Pfizer 8 33 51 50 19698
Apollo Hospitals -2 -5 10 14 19311
Sanofi 5 17 9 11 15963
Ipca Labs. 5 22 44 46 14594
Syngene Int. -9 -6 8 13 12060
Natco Pharma 1 4 -14 -17 10659
Alembic Pharma -4 8 -8 -11 10416
Fortis Health -14 9 -3 -11 10305
Glenmark Pharma. 18 -10 -50 -48 9687
Ajanta Pharma 0 -6 -17 -10 8578
Jubilant Life -1 8 -25 -29 8442
Aster DM 3 23 -4 -1 7546
Narayana Hrudayalaya7 24 58 49 6293
FDC Ltd 13 22 19 14 3491
Suven Life -5 -1 20 14 3460
Indoco Remedies 2 -6 -31 -30 1384
Hester Bio -3 -6 40 34 1341
Hikal -10 -35 -35 -35 1250
Shalby Ltd -15 14 -34 -36 1048
Healthcare Global -17 -17 -52 -52 834
NGL Fine-Chem -21 -17 -7 -10 250
Return (%)
Source: Bloomberg
Global Indices Performance
Company 1M 3M YTD 1Y 3Y 5Y
S&P 500 Pharm Index (US)6 9 11 5 11 7
NASDAQ Biotechnology (US)8 15 24 14 11 4
S&P Pharmaceuticals (US)8 11 14 1 3 -3
DJ Pharma and Biotech (US)6 11 15 8 11 6
DJ STOXX Healthcare (EU)2 8 30 24 12 8
MSCI World Pharm & Biotech5 11 19 13 13 6
NSE Pharma 3 -1 -8 -8 -9 -6
Return (%)
Source: Bloomberg
Research Analyst
Siddhant Khandekar
MItesh Shah, CFA
Sudarshan Agarwal
ICICI Securities | Retail Research 2
ICICI Direct Research Monthly Sector Update | Health Check
IPM grows 14% YoY in November, best growth in 32 months
albeit on lower base
The Indian pharmaceutical market (IPM) grew 14.5% YoY to | 12624 crore
in November 2019. The growth was attributable to volume growth: 5.9%
(highest in last 17 months), price hike: 5.7%, and new product launches: 3%
(highest in last 16 months). The leg up was also on account of low base of
November 2018 (7% YoY growth in that month).
Drugs under NLEM list grew 15.2% YoY while non-NLEM drugs grew 14.6%.
The fixed dosage combination (FDCs) related market showed a decline of
50.2%, approved FDC market grew 14.2%, & single molecules grew 14.7%.
Among companies under I-direct coverage, seven (Dr Reddy’s, Pfizer, FDC,
Glenmark, Torrent, Cadila, Lupin) have outperformed industry growth rate.
Therapy wise, seven major therapies have registered faster than industry
growth. Notable among them with growth rates- respiratory 19.7%, anti-
infective – 17%, urology – 15.8% and pain – 15.2%.
Domestic companies have grown at 15.1% YoY while MNC companies have
grown at 12.4%.
On a MAT basis, IPM growth was 9.8% YoY to | 139144 crore.
Exhibit 1: Domestic formulations - Growth trend
Source: ICICI Direct Research; AIOCD
Exhibit 2: Companies growth in domestic market in November 2019
Source: ICICI Direct Research, AIOCD
7.0
9.7 1
0.8
9.9
8.9
10.5
7.2
6.8
13.3
9.5
11.9
5.2
14.5
0.0
5.0
10.0
15.0
20.0
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
(%
)
Indian Pharma Market
12.010.1
8.9
0.0
10.712.6
28.0
9.4
20.0
12.811.4
15.3
-6.6
23.4
6.7
14.5
17.8
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Abbott
Aja
nta
Ale
mbic
Bio
con
Cadila
Cip
la
DR
L
Gle
nm
ark
GS
K P
harm
a
Indoco
Ipca L
abs
Lupin
Natco
Pfiz
er
Sanofi
Sun P
harm
a
Torrent
(%
)
Therapy wise performance (| crore)
Therapy Nov'19 Nov'18 % Oct'19 %
Anti-Infectives 1789 1529 17.0 1806 -0.9
Cardiac 1542 1357 13.6 1491 3.4
GI 1342 1172 14.5 1322 1.6
Anti Diabetic 1190 1069 11.3 1161 2.4
Respiratory 1077 900 19.7 989 9.0
Vitamins 1058 931 13.7 1033 2.4
Derma 871 772 12.8 818 6.4
Pain 870 755 15.2 851 2.3
Neuro 749 660 13.5 724 3.6
Gynaecological 585 524 11.8 570 2.6
Anti-Neoplastics 263 234 12.5 253 4.0
Hormones 236 208 13.7 224 5.5
Ophthal 226 203 11.4 218 3.8
Vaccines 200 185 8.5 195 2.6
Urology 163 141 15.8 163 0.3
Blood Related 151 123 23.1 156 -3.0
Others 122 99 22.6 113 7.6
Stomatologicals 66 56 18.4 62 6.7
Sex Stimulants 66 55 19.5 60 8.9
Anti Malarials 58 51 13.7 68 -14.1
Source: ICICI Direct Research; AIOCD
Top brands in IPM (MAT; | crore)
Source: ICICI Direct Research; AIOCD
Acute vs. chronic vs. sub chronic
Source: ICICI Direct Research; AIOCD; As per AIOCD MAT Nov 2019
Acute
47%
Chronic
33%
Sub
Chronic
20%
Brand Company Therapy Nov'19YoY %
Mixtard Abbott Anti Diabetic 545 8.0
Lantus Sanofi IndiaAnti Diabetic 492 9.9
Glycomet GpUSV Anti Diabetic 487 8.1
Janumet MSD Anti Diabetic 477 15.0
Augmentin GSK Anti-Infectives440 19.3
Galvus Met Novartis Anti Diabetic 434 2.4
Liv 52 Himalaya GI 402 5.1
Duphaston Abbott Hormones 391 20.1
Clavam Alkem Anti-Infectives374 13.0
Thyronorm Abbott Hormones 355 9.3
ICICI Securities | Retail Research 3
ICICI Direct Research Monthly Sector Update | Health Check
Exhibit 3: Domestic formulations – market share (MAT value November 2019)
Source: ICICI Direct Research, AIOCD
Exhibit 4: Acute vs. chronic vs. sub chronic (MAT value November 2019)
Source: ICICI Direct Research, AIOCD
8%
6%
5%
4%4%
3%
2% 2% 2% 2%
1%1%
1% 1% 1% 1%0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Sun
Abbott
Cip
la
Cadila
Lupin
Torrent
Pfiz
er
Dr.
Reddys
Sanofi
Gle
nm
ark
Ipca
Ale
mbic
FD
C
Natco
Indoco
Aja
nta
Bio
con
38 40
57
3142
52
77
40
82
65
27
88
42
60
44 4127
54
3951
24
6045 28
9
41
527
57
1
54 17 5245
52
30
2210
199 13
2013 19 13 7
16 115
23
415
2116
0
20
40
60
80
100
120
Abbott
Aja
nta
Ale
mbic
Bio
con
Cip
la
Dr.
Reddys
FD
C
Gle
nm
ark
Indoco
IPC
A
Lupin
Sun
Novartis
Pfiz
er*
Sanofi
Sun
Torrent
Cadila
%
Acute Chronic Sub Chronic
ICICI Securities | Retail Research 4
ICICI Direct Research Monthly Sector Update | Health Check
Exhibit 5: Top five brands in value terms (MAT value November 2019)
Sun Brand Therapy Sales
1 Rosuvas Cardiac 272
2 Levipil Neuro 271
3 Istamet Anti Diabetic 259
4 Volini Pain 257
5 Gemer Anti Diabetic 203
Cipla Brand Therapy Sales
1 Foracort Respiratory 325
2 Budecort Respiratory 234
3 Duolin Respiratory 217
4 Seroflo Respiratory 191
5 Asthalin Respiratory 171
Cadila Brand Therapy Sales
1 Deriphyllin Respiratory 166
2 Skinlite Derma 163
3 Atorva Cardiac 136
4 Mifegest Kit Gynaecological 126
5 Pantodac GI 124
Lupin Brand Therapy Sales
1 Gluconorm-G Anti Diabetic 254
2 Huminsulin Anti Diabetic 185
3 Budamate Respiratory 128
4 Gibtulio Anti Diabetic 124
5 Ondero Anti Diabetic 109
Torrent Brand Therapy Sales
1 Shelcal Vitamins 219
2 Chymoral FortePain 154
3 Nikoran Cardiac 109
4 Azulix-Mf Anti Diabetic 102
5 Nexpro Rd GI 95
Dr. Reddys Brand Therapy Sales
1 Omez GI 150
2 Omez D GI 129
3 Econorm GI 127
4 Atarax Derma 108
5 Razo D GI 88
Glenmark Brand Therapy Sales
1 Telma Cardiac 268
2 Telma H Cardiac 213
3 Telma Am Cardiac 134
4 Candid Derma 119
5 Ascoril Plus Respiratory 112
IPCA Brand Therapy Sales
1 Zerodol Sp Pain 192
2 Zerodol P Pain 124
3 Hcqs Anti Malarials 115
4 Folitrax Anti-Neoplastics 64
5 Larinate Anti Malarials 52
Alembic Brand Therapy Sales
1 Azithral Anti-Infectives 163
2 Althrocin Anti-Infectives 82
3 Wikoryl Respiratory 71
4 Roxid Anti-Infectives 53
5 Gestofit Gynaecological 48
Natco Brand Therapy Sales
1 Velpanat Anti-Infectives 172
2 Hepcinat Anti-Infectives 159
3 Geftinat Anti-Neoplastics 122
4 Erlonat Anti-Neoplastics 104
5 Natdac Anti-Infectives 94
Indoco Brand Therapy Sales
1 Febrex Plus Respiratory 89
2 Cyclopam GI 55
3 Sensodent-K Stomatologicals 52
4 Oxipod Anti-Infectives 51
5 Atm Anti-Infectives 47
Ajanta Brand Therapy Sales
1 Met Xl Cardiac 107
2 Atorfit Cv Cardiac 54
3 Melacare Derma 50
4 Feburic Pain 35
5 Met Xl Am Cardiac 26
Biocon Brand Therapy Sales
1 Insugen Anti Diabetic 113
2 Basalog Anti Diabetic 86
3 Canmab Anti-Neoplastics 75
4 Erypro Blood Related 27
5 Insugen R Anti Diabetic 25
Abbott Brand Therapy Sales
1 Mixtard Anti Diabetic 545
2 Duphaston Gynaecological 391
3 Thyronorm Hormones 355
4 Novomix Anti Diabetic 306
5 Phensedyl Cough LinctusRespiratory 290
Sanofi Brand Therapy Sales
1 Lantus Anti Diabetic 492
2 Allegra Respiratory 188
3 Combiflam Pain 188
4 Amaryl M Anti Diabetic 160
5 Hexaxim Vaccines 157
Source: ICICI Direct Research; AIOCD; Sanofi includes Sanofi India and Sanofi Pasteur (Vaccine)
ICICI Securities | Retail Research 5
ICICI Direct Research Monthly Sector Update | Health Check
Exhibit 6: Top five therapies in value term (MAT value November 2019)
Sun Therapy Sales (|cr)
1 Cardiac 2000
2 Neuro 1904
3 GI 1377
4 Anti-Infectives 1163
5 Anti Diabetic 1048
Cipla Therapy Sales (|cr)
1 Respiratory 2219
2 Anti-Infectives 1417
3 Cardiac 855
4 GI 413
5 Urology 374
Cadila Therapy Sales (|cr)
1 Anti-Infectives 880
2 Cardiac 791
3 Respiratory 628
4 GI 619
5 Pain 549
Lupin Therapy Sales (|cr)
1 Cardiac 1259
2 Anti Diabetic 1255
3 Anti-Infectives 753
4 Respiratory 653
5 GI 384
Torrent Therapy Sales (|cr)
1 Cardiac 1307
2 GI 687
3 Neuro 631
4 Vitamins 542
5 Anti Diabetic 347
Dr. Reddys Therapy Sales (|cr)
1 GI 752
2 Cardiac 438
3 Derma 358
4 Respiratory 266
5 Anti Diabetic 244
Glenmark Therapy Sales (|cr)
1 Derma 874
2 Cardiac 857
3 Respiratory 547
4 Anti-Infectives 420
5 Anti Diabetic 274
IPCA Therapy Sales (|cr)
1 Pain 569
2 Cardiac 324
3 Anti Malarials 302
4 Anti-Infectives 139
5 GI 134
Alembic Therapy Sales (|cr)
1 Anti-Infectives 363
2 Cardiac 259
3 Respiratory 221
4 GI 199
5 Gynaecological 190
Natco Therapy Sales (|cr)
1 Anti-Infectives 517
2 Anti-Neoplastics 513
3 Pain 33
4 Cardiac 4
5 Others 2
Indoco Therapy Sales (|cr)
1 Stomatologicals 166
2 Respiratory 160
3 Anti-Infectives 157
4 GI 126
5 Vitamins 76
Ajanta Therapy Sales (|cr)
1 Cardiac 345
2 Ophthal 199
3 Derma 135
4 Pain 49
5 Vitamins 29
Biocon Therapy Sales (|cr)
1 Anti Diabetic 259
2 Anti-Neoplastics 135
3 Blood Related 30
4 Anti-Infectives 25
5 Derma 16
Abbott Therapy Sales (|cr)
1 Anti Diabetic 1725
2 GI 1487
3 Vitamins 903
4 Neuro 732
5 Anti-Infectives 696
Sanofi Therapy Sales (|cr)
1 Anti Diabetic 940
2 Cardiac 487
3 Vaccines 408
4 Respiratory 325
5 Pain 271
Source: ICICI Direct Research, AIOCD; Sanofi includes Sanofi India and Sanofi Pasteur (Vaccine)
ICICI Securities | Retail Research 6
ICICI Direct Research Monthly Sector Update | Health Check
Monthly Sector News
Price hikes, new launches, recalls, approvals
Dr Reddy's enters Indian nutrition segment with 'Celvida' drink
Dr Reddy's has entered the nutrition segment with the launch of its diabetes
nutrition drink 'Celvida' in India. As per the press release, the drink is clinically
proven (Indian patients) to help manage blood glucose levels.
Lupin launches hypokalaemia drug in US
Lupin has launched the generic equivalent of Pharma Research Software
Solutions, Potassium Chloride (KCl) for oral solution, 20 mEq in US. The
drug, indicated for the treatment & prophylaxis of hypokalemia, had annual
sales of ~US$90 million in the US (as per IQVIA MAT September 2019).
Lupin launches 'Adhero', smart device to support respiratory treatment in
India
Lupin has launched 'Adhero' in India, a connected smart device for patients
with chronic respiratory disease to help track their metered-dose inhaler
(MDI) usage and thereby improve therapy adherence.
Biocon, Mylan launch oncology biosimilar 'Ogivri' in US
Biocon, Mylan have launched Ogivri (Trastuzumab - dkst), oncology
biosimilar of La Roche's Herceptin (Trastuzumab) in 420 mg multiple-dose
vial & 150 mg single-dose vial in US. The drug, used in the treatment of
breast and metastatic stomach cancer, had annual sales of US$2.9 billion in
FY18 (as per Roche's annual report). This is the second biosimilar launched
by Biocon-Mylan in the US. We have already factored in this opportunity in
our valuation.
Dr Reddy’s launches cancer drug 'Bortezomib' in US
Dr Reddy's has launched Bortezomib for injection, 3.5 mg/vial for
intravenous use only in US. The drug, indicated for treatment of multiple
myeloma and mantle cell lymphoma in adult patients, was approved by
USFDA through a 505(b)(2) new drug application (NDA) pathway.
Aurobindo recalls three drugs from US
As per media reports, Aurobindo Pharma has issued a class-II recall of its
heartburn drug, 'ranitidine' in tablets/capsules (2,76,048 bottles) and syrup
form (19,320 bottles) from US due to detection of NDMA
(Nitrosodimethylamine) impurity. The company has recalled (Class - II)
11,200 vials of the local anaesthetic injection, Lidocaine HCl from US due to
presence of impurities. Aurobindo has also recalled (Class-III) 1,97,000 vials
of Amiodarone Hydrochloride injection, used in treating irregular heartbeat,
due to visible presence of particulate matter in the vials due to crystallisation.
Lawsuits, court rulings, settlements, regulatory issues
Cipla's Patalganga facility receives four Form 483 observations
Cipla's Patalganga manufacturing facility has received four observations
after the USFDA cGMP inspection (for both API & formulations) conducted
from November 4-13.
Divi's Unit-I facility in Telangana clears USFDA cGMP inspection
Divi's Unit-I facility at Lingojigudem, Telangana has cleared USFDA cGMP
inspection conducted from November 11-15 without observations (Form
483) issued.
ICICI Securities | Retail Research 7
ICICI Direct Research Monthly Sector Update | Health Check
Indoco's Goa plants get USFDA establishment inspection report
Indoco's sterile (Plant II) & solid dosages (Plant III) manufacturing facilities at
Verna, Goa have received establishment inspection report (EIR) from
USFDA. The site has maintained its voluntary action indicated (VAI) status.
The USFDA inspection (pre-approval inspection for a sterile injectable
product) conducted from October 7-15 had ended with two observations
which have now been closed.
USFDA warns Torrent pharma for cGMP violations
As per media reports, USFDA has warned Torrent Pharma for violating
cGMP practices for finished pharmaceuticals at its Levittown, Pennsylvania
based manufacturing facility. The USFDA inspection of the site was carried
out earlier this year from March 11-April 9.
Indoco's CRO at Hyderabad receives EIR from USFDA
Indoco Remedies' Clinical Research Organisation (Anacipher) at Hyderabad
has received establishment inspection report (EIR) from USFDA indicating
inspection closure. The inspection was conducted from Aug 5-9, 2019 with
no Form 483 observations being issued.
USFDA classifies Ipca's Silvassa formulations unit as OAI
USFDA has classified Ipca Labs' formulations facility at Piparia, Silvassa as
official action indicated (OAI). The facility had received three observations
after the cGMP inspection conducted from Aug 19-23 by USFDA.
In lieu of pre-existing import alert, the facility does not contribute to US
business. We do not expect any material impact of the OAI status on current
operations.
Biocon receives USFDA approval for Pegfilgrastim from new Bangalore unit
USFDA has approved Biocon-Mylan's supplemental biologics license
application (sBLA) for the manufacture of Pegfilgrastim drug substance
(Fulphilia) at the company's new biologics facility in Bengaluru. USFDA had
earlier conducted the pre-approval inspection of the new drug substance
unit from September 10-19, 2019.
Sun Pharma may face multi-district antitrust lawsuits in US
As per media reports, Sun Pharma will face multidistrict antitrust litigations
over three generics (Valacyclovir, Valsartan & Esomeprazole) in the US. The
proposed class actions alleges antitrust violations and racketeering by Sun
Pharma and its subsidiary Ranbaxy.
Lawsuit filed against Lupin, two others for delaying diabetic drug generics
As per media reports, three pharmacy chains, including Walgreens Boots
Alliance, have filed a suit against Bausch Health, Assertio Therapeutics and
Lupin, for overcharging of Bausch's diabetes drug Glumetza. The lawsuit
alleges that Assertio and Lupin struck a deal with Bausch to delay entry of
their generic versions of Glumetza thereby maintaining sales monopoly of
the branded drug and its generic equivalents.
Cadila files liver disease drug in India
Cadila Healthcare has filed a new drug application (NDA) for Saroglitazar
magnesium in non-alcoholic steatohepatitis (NASH) with the Drug Controller
General of India (DGCI). As per the company's press release, NASH (liver
disease) has no currently available treatment options.
Sun Pharma, Biocon, HEC Pharm receive USFDA approval for Novartis' MS
drug
USFDA has approved three generic equivalents of Novartis's Gilenya
(Fingolimod Hydrochloride) by Sun Pharma, Biocon and HEC Pharm in US.
The drug, used to treat relapsing forms of multiple sclerosis in adult patients,
had annual sales in US of ~US$1.8 billion in CY18.
ICICI Securities | Retail Research 8
ICICI Direct Research Monthly Sector Update | Health Check
Cadila's Dabhasa API facility receives USFDA EIR
Cadila Healthcare's API facility at Dabhasa, Gujarat has received
establishment inspection report (EIR) from USFDA classifying the facility as
no action indicated (NAI). The facility was inspected by USFDA from Oct 7-
11 with no observations (Form 483) being issued.
M&As, demergers, tie-ups and JVs
Cipla to acquire remaining 40% stake in its Sri Lankan subsidiary
Cipla has signed an agreement to acquire remaining 40% stake in its Sri
Lankan subsidiary, Cipla Pharma Lanka, from Citi Health Imports Pvt Ltd for
a cash consideration of ~| 1.6 lakh. The transaction is expected to be
completed by December 10, 2019.
Aurobindo to acquire R&D assets from Profectus Biosciences
Aurobindo Pharma (subsidiary Auro Vaccines) inks pact to acquire certain
R&D assets from Profectus Biosciences (US), a clinical-stage vaccine
developer, for ~US$11.3 million in cash (and potential milestone payments).
The acquisition is indicated to be completed by H1CY20.
Cadila's board approves merger with four of its subsidiaries
Cadila Healthcare's (CHL) board has approved the draft Scheme of
Amalgamation with four wholly owned subsidiaries; Zydus Technologies
(ZTL), Alidac Pharma (APL), Liva Pharma (LPL) and Dialforhealth India (DHIL).
The amalgamation is subject to approval from NCLT and shareholders &
creditors of CHL, ZTL, APL, LPL and DHIL.
Natco completes | 5 crore investment in OMRV
Natco Pharma has completed | 5 crore investment in OMRV Hospitals via 5
lakh, 0.05% compulsory convertible cumulative preference share (CCCPS)
under private placement. On a fully diluted basis Natco will hold 12.81%
stake in the company.
Others
Natco's formulations facility at Vizag commences operations
Natco Pharma's finished dosage formulations facility in Vishakhapatnam has
commenced commercial operations. The facility, part of the SEZ, will cater
primarily to the US and other international markets. As per the press release,
an application for site transfer for the first product to trigger a regulatory
audit has already been filed with the USFDA.
Cadila announces second Phase III trial for novel anaemia drug, Desidustat
Cadila has announced the second Phase III trial (DREAM - D) of Desidustat,
an investigational new drug, targeted at treating anaemia in dialysis
dependent CKD patients. The study will be a multicentre (50-60 sites in
India), randomized, active-controlled clinical trial to evaluate the efficacy &
safety of Desidustat tablet versus Epoetin alpha injection.
China's commerce ministry removes anti-dumping duty on pyridine
Jubilant Life has informed in an exchange filing that China's Ministry of
Commerce (MOFCOM) has decided to terminate the 17.6% anti‐dumping
duty on imported pyridine originating in India.
Jubilant Life's subsidiary partially redeems its Senior Notes
Jubilant Life's subsidiary, Jubilant Pharma(JPL) has partially redeemed its
4.875% Senior Notes due 2021 worth US$100 million (out of US$300 million)
at a redemption price of 102.43750% along with accrued interest till date.
ICICI Securities | Retail Research 9
ICICI Direct Research Monthly Sector Update | Health Check
Suven's SUVN-502 phase 2 study fails to meet primary endpoint in study
Suven Life Sciences announced the results of its SUVN-502 (Masupirdine)
phase 2A study targeted at Alzheimer’s disease (AD). The unique triple
(Masupiridine+Donepezil+Memantine) therapy failed to meet its pre-
specified primary endpoint in proof of concept (POC) study. Detailed
findings will be presented at clinical trials on Alzheimer’s disease (CTAD)
from December 4-7 at San Diego. Substantial future cash flow was expected
on the success of these POC results. Hence, adverse results are negative for
the stock. However, further financial impact is expected to be minimal
mainly because the company has already expense all the R&D cost of SUVN
-502 in the P&L.
Narayana discontinues Kenya hospital project
Narayana Hrudayalaya (NH) has discontinued its plan to establish a 130
bedded hospital in Nairobi, Kenya due to financial institutional partner's
inability to fund the project. As per the press release, the project's carrying
value for NH (FY19) is | 2.94 crore, having invested ~US$0.66 million in the
same. The realisable value from project discontinuation is dependent on the
amount received from land sale.
Apollo, Dubai Health Authority ink pact to collaborate in healthcare
Apollo Hospitals, Dubai Health Authority (DHA) have signed a memorandum
of understanding (MoU) to collaborate on opportunities in the healthcare &
healthcare related technology.
ANDA Approvals/Launches
Cadila has received tentative USFDA approval for the generic version of
Otelza (Apremilast) tablets, 10/20/30 mg. The drug, used to treat psoriatic
arthritis, plaque psoriasis & mouth sores (Behcet's disease patients), will be
manufactured at the company's Ahmedabad (SEZ) manufacturing facility.
Cadila Healthcare has received final USFDA approval for the generic,
lsosorbide Dinitrate (US RLD - Isordil) tablets in the US. The drug, used to
prevent chest pain attacks (angina), will be manufactured at the company's
Baddi formulations facility. The company has also received ANDA approval
for Desonide cream (Derma therapy), 0.05% from USFDA, which will be
manufactured at the group's topical facility at Ahmedabad.
Alembic Pharma has received USFDA approvals for the generic version of
Novartis' Jadenu (Deferasirox) tablets, (two final - 90/360 mg & one tentative
approval - 180 mg) in the US. The company also got final ANDA approval
for Novartis' Exjade (Deferasirox) tablets for oral suspension, 125/250/500
mg in the US. The cumulative estimated market size for the drugs, used in
treatment of chronic iron overload due to blood transfusions, is US$609
million as per IQVIA MAT December 2018.
Glenmark has got USFDA approval for the generic version of Salix Pharma's
Glumetza (Metformin Hydrochloride) extended-release tablets, 500/1000 mg
in the US. The drug, used in management of type 2 diabetes, had annual
sales of ~US$226.7 million in the US (as per IQVIA MAT September 2019).
Alembic Pharma has got USFDA approval for the generic version of Allergan
Sales' Rapaflo (Silodosin) capsules, 4/8 mg in US. The drug, used to treat
symptoms of benign prostatic hyperplasia (BPH, prostate enlargement) had
an estimated market size of ~US$114 million in the US as per IQVIA MAT
June 2019.
Alembic Pharma (Aleor Derma, JV) has got tentative USFDA approval for
generic version of HZNP Medicines' Pennsaid (Diclofenac Sodium) topical
solution, 2% w/w in US. The drug, used in treatment of knee osteoarthritis
pain, had an estimated market size of ~US$974 million as per IQVIA MAT
December 2018.
Cadila Healthcare has received tentative USFDA approval for the generic,
Lorcaserin Hydrochloride (US RLD - Belviq) tablets, 10 mg in US. The drug,
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used to treat obesity, will be manufactured at the company's formulations
facility at Ahmedabad SEZ.
Dr Reddy's has launched the generic equivalent of Sanofi-Aventis', Hectorol
(Doxercalciferol) injection multiple dose vials, 4 mcg/2 ml in US. The drug,
indicated for the treatment of secondary hyperparathyroidism (SHPT) in
patients with chronic kidney disease on dialysis, had annual sales of
~US$138 million in US (IQVIA MAT September 2019).
Lupin has launched the generic equivalent of Sun Pharma's, Westcort
(Hydrocortisone Valerate, Derma therapy) cream, 0.2% in US. The drug had
annual sales of ~US$11.5 million in US (as per IQVIA MAT September 2019).
Dr Reddy's has launched USFDA approved generic version of Novartis'
Jadenu (Deferasirox) film coated tablets, 90/360 mg in US. The company has
also launched the generic for Novartis' Exjade (Deferasirox) tablets for oral
suspension, 125/250/500 mg in US. The drugs, used in treatment of chronic
iron overload due to blood transfusions, had US sales of ~US$113 million
(Exjade) and ~US$470 million (Jadenu) as per IQVIA MAT September 2019.
Exhibit 7: One-year forward PE
Source: ICICI Direct Research, Bloomberg
0.0
10.0
20.0
30.0
40.0
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
x
NSE500 Index NSE Pharma
29% Premium
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Monthly Sector Update | Health Check
Exhibit 8: ICICI Direct coverage universe (Healthcare)
Company I-Direct CMP TP Rating M Cap
Code (|) (|) (| cr) FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E FY19FY20EFY21EFY22E
Ajanta Pharma AJAPHA 985 1,180 Buy 8578 43.5 43.5 53.4 65.5 22.6 22.6 18.4 15.0 21.8 21.8 20.8 21.8 17.1 17.1 16.3 17.4
Alembic PharmaALEMPHA 553 540 Hold 10416 31.4 31.4 27.8 32.6 17.6 17.6 19.9 17.0 19.6 19.6 15.5 17.1 21.8 21.8 13.7 14.2
Apollo HospitalsAPOHOS 1388 1,800 Buy 19311 17.0 17.0 43.7 68.1 81.8 81.8 31.7 20.4 8.8 8.8 14.8 17.5 7.1 7.1 14.9 19.6
Aurobindo PharmaAURPHA 450 475 Hold 26408 42.1 42.1 55.4 59.5 10.7 10.7 8.1 7.6 15.9 15.9 15.7 16.1 17.7 17.7 16.7 15.4
Biocon BIOCON 292 310 Buy 35100 6.2 6.2 10.6 15.6 47.1 47.1 27.6 18.7 10.9 10.9 16.7 20.9 12.2 12.2 15.7 19.1
Cadila HealthcareCADHEA 266 260 Hold 27165 18.1 18.1 16.6 18.7 14.7 14.7 16.1 14.3 13.0 13.0 11.7 12.4 17.8 17.8 13.5 13.6
Cipla CIPLA 462 520 Hold 37223 18.6 18.6 25.3 30.0 24.9 24.9 18.3 15.4 10.9 10.9 13.6 14.8 10.0 10.0 11.2 11.9
Divi's Lab DIVLAB 1832 1,850 Hold 48660 51.0 51.0 59.1 71.2 36.0 36.0 31.0 25.7 25.5 25.5 22.1 22.8 19.4 19.4 17.0 17.6
Dr Reddy's LabsDRREDD 2918 3,000 Hold 48453 114.8 114.8 140.0 166.7 25.4 25.4 20.8 17.5 11.1 11.1 13.9 16.9 13.6 13.6 12.7 13.5
Glenmark PharmaGLEPHA 343 410 Hold 9687 26.9 26.9 36.7 46.1 12.8 12.8 9.4 7.4 15.3 15.3 15.0 17.0 13.5 13.5 14.0 15.1
Hikal HIKCHE 102 140 Buy 1255 6.3 8.4 9.7 11.7 16.3 12.2 10.5 8.7 12.2 14.3 13.0 14.2 11.5 13.6 14.2 14.8
Ipca Laboratories IPCLAB 1154 1,355 Buy 14594 35.1 35.1 60.7 75.3 32.9 32.9 19.0 15.3 15.0 15.0 19.9 21.2 14.2 14.2 18.0 18.9
Lupin LUPIN 750 730 Hold 33973 16.5 16.5 34.6 36.8 45.3 45.3 21.6 20.4 9.4 9.4 10.6 13.0 5.4 5.4 9.2 9.0
Narayana HrudalayaNARHRU 307 360 Buy 6293 2.9 2.9 9.8 13.3 105.9 105.9 31.4 23.1 7.7 7.7 13.9 16.5 5.5 5.5 14.5 16.7
Natco Pharma NATPHA 586 595 Hold 10659 34.9 34.9 23.7 22.0 16.8 16.8 24.7 26.6 21.3 21.3 12.2 10.5 18.5 18.5 10.0 8.6
Sun Pharma SUNPHA 436 470 Hold 104416 15.9 15.9 20.2 24.7 27.5 27.5 21.6 17.6 10.3 10.3 11.3 12.5 9.2 9.2 9.9 11.3
Syngene Int. SYNINT 302 360 Buy 12060 8.3 8.3 10.0 12.8 36.5 36.5 30.2 23.7 14.8 14.8 13.5 15.8 16.8 16.8 14.4 15.7
Torrent Pharma TORPHA 1872 2,020 Buy 31650 48.9 48.9 74.0 91.8 38.3 38.3 25.3 20.4 14.2 14.2 18.7 21.2 17.5 17.5 19.6 20.6
RoE (%)EPS (|) PE(x) RoCE (%)
Source: ICICI Direct Research, Bloomberg
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ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorises them as Buy, Hold,
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
Buy: >15%;
Hold: -5% to 15%;
Reduce: -5% to -15%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
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