ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Monthly
Sector U
pdate
March 16, 2020
Health Check
Aurobindo VAI rescinded; warning letter to Cipla…
In a surprisingly odd turn of events, USFDA has rescinded the voluntary
action indicated (VAI) status issued (on February 18, 2020) to Aurobindo
Pharma's Unit IV, injectable facility at Pashamylaram, Hyderabad. The VAI
was issued for the inspection conducted from November 4-13, 2019, which
had resulted in 14 observations. This does not bode well for the company
since it has 46 pending filings (~30% of total pending filings) including 50-
60% of pending injectables that have been filed from this plant. The
company has four other plants under USFDA scrutiny (Unit XI: warning letter
& Unit VII/I/IX have official action indicated (OAI) status.
In another adverse USFDA update, Cipla's Goa manufacturing facility
received a warning letter (WL) from USFDA for the inspection conducted in
September 16-27, 2019 post which the unit had received 12 observations.
However, this warning letter was already expected post the assignment of
official action indicated (OAI) status in January 2020.
On the Indian pharma market front, the DGFT has restricted export of 13
APIs and their formulations amid supply issues stemming from the
Coronavirus outbreak.
On the products front, the USFDA has accepted Biocon & Mylan's biologics
license application (BLA) for proposed oncology biosimilar to Avastin
(Bevacizumab) for review. Also, Cadila Healthcare has received Drug
Controller General of India’s (DGCI) approval for its liver disease drug,
Saroglitazar in India. The drug, a new drug application (NDA), is indicated
for treatment of non-cirrhotic non-alcoholic steatohepatitis (NASH).
Biocon’s partner, Mylan, has won a device patent litigation in the New Jersey
district court against Sanofi Aventis', ‘Lantus Solostar’ device for its insulin
glargine product, 'Semglee'.
The Indian pharmaceutical market (IPM) grew 12.1% YoY to | 12073 crore
in February 2020. The growth was attributable to a price hike: 5.4%, volume
expansion of 3.8% and new product launches: 2.9%. On a MAT basis, IPM
growth was 9.7% YoY to | 142658 crore.
Amid fall, panic, stock specific approach remains…
In the last few days, markets across the globe, including India, witnessed a
sharp fall due to hampered trade, travelling restrictions and possible impact
due to rapid spread of Covid-19 pandemic across the world. In the
healthcare space, barring a few cases, most stocks withstood the carnage.
That said, we still refrain from taking overall sector call and maintain our
stock-specific recommendation approach. On the business front, domestic
growth has stabilised on an annual basis and is likely to maintain the tempo
on the back of new launches and volume gain. The US generics narrative in
the last few quarters is reflecting some sort of normalcy on the back of
stability in the base business and new launches. However, regulatory
uncertainty is likely to remain as an overhang on US-heavy companies.
Profitability is likely to improve as the management commentary continues
to suggest cost rationalisation and MR productivity. Improving operating
leverage is also likely to contribute to margin expansion. The companies are
also moderating their capex plans to focus on better RoCE. As per the
assertion of most managements, Covid-19 issue is not a concern currently
as inventory levels are covered till March for most APIs and key starting
materials (KSM). That said, if supplies do not resume in March, the industry
is likely to start facing raw materials crunch from Q1FY21. India focused
players, including MNCs, global CRAMs players and hospitals are our
preferred sub-segments for bargain hunting.
Stock Performance
Mcap
Company 1M 3M YTD 1Y 16-Mar
Sun Pharma.Inds. -8 -11 -11 -17 92708
Divi's Lab. -9 5 6 15 52009
Dr Reddy's Labs -12 4 1 10 48473
Torrent Pharma. -5 7 9 8 33987
Biocon -9 -5 -4 -10 33780
Cipla -7 -9 -13 -22 33439
Abbott -1 10 11 100 30950
Lupin -14 -17 -19 -21 27934
Cadila Health. -5 -2 0 -25 26131
Aurobindo Pharma -17 -7 -7 -45 24867
Apollo Hospitals -11 10 5 34 20991
Pfizer 4 0 3 36 19946
Ipca Labs. -9 17 15 48 16553
Sanofi -5 1 0 22 16098
Ajanta Pharma -10 31 31 26 11131
Syngene Int. -12 -9 -16 -7 10754
Alembic Pharma -13 2 -3 2 10444
Fortis Health -12 2 4 -1 10343
Natco Pharma -17 -3 -5 -5 10215
Glenmark Pharma. -30 -32 -33 -64 6599
Narayana Hrudayalaya-15 -5 -5 31 5985
Aster DM -34 -26 -28 -26 5810
Jubilant Life -35 -38 -36 -61 5452
FDC Ltd -13 6 2 21 3680
Indoco Remedies -23 27 1 4 1775
Hikal -26 -16 -21 -46 1113
Hester Bio -23 -22 -19 -19 995
Healthcare Global -17 5 -6 -49 867
Shalby Ltd -35 -32 -30 -51 696
NGL Fine-Chem -34 -28 -29 -34 185
Return (%)
Source: Bloomberg
Global Indices Performance
Company 1M 3M YTD 1Y 3Y 5Y
S&P 500 Pharm Index (US)-10 -8 -10 -1 5 5
NASDAQ Biotechnology (US)-15 -14 -13 -8 2 -2
S&P Pharmaceuticals (US)-22 -15 -20 -12 -4 -9
DJ Pharma and Biotech (US)-12 -10 -11 -3 5 3
DJ STOXX Healthcare (EU)-22 -17 -17 -3 2 1
MSCI World Pharm & Biotech-14 -11 -12 -1 5 2
NSE Pharma -12 -9 -9 -20 -11 -10
Return (%)
Source: Bloomberg
Research Analyst
Siddhant Khandekar
MItesh Shah, CFA
Sudarshan Agarwal
Siddhant Khandekar
ICICI Securities | Retail Research 2
ICICI Direct Research
Monthly Sector Update | Health Check
IPM grows 12% YoY in February, driven by price growth
The Indian pharmaceutical market (IPM) grew 12.1% YoY (7.6% in January
2020) to | 12073 crore in February 2020. The growth was attributable to price
hike: 5.4%, volume expansion of 3.8% (contracted 0.3% in January), and
new product launches: 2.9%.
Drugs under NLEM list grew 12.0% YoY while non-NLEM drugs grew 12.1%.
Among companies under I-direct coverage, 10 (Dr Reddy’s, FDC, Torrent,
Pfizer, Glenmark, Sun Pharma, Natco, Lupin, Ajanta, Ipca) have
outperformed the industry growth rate.
Therapy wise, eight major therapies registered faster than industry growth.
Notable among them with growth rates – blood related: 20.5%, respiratory:
17.9%, stomatologicals: 15.5%, urology: 14.8%, anti-infective: 14.1%,
cardiac: 13.3%, and vaccines: 12.3%.
Domestic companies have grown at 13.2% YoY while MNC companies have
grown at 7.6%.
On a MAT basis, IPM growth was 9.7% YoY to | 142658 crore.
Exhibit 1: Domestic formulations - Growth trend
Source: ICICI Direct Research; AIOCD
Exhibit 2: Companies growth in domestic market in February 2020
Source: ICICI Direct Research, AIOCD
10.0
8.8
10.4
7.1
6.9
13.4
9.6
12.1
5.2
14.6
8.7
7.7
12.1
0.0
5.0
10.0
15.0
20.0
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
(%
)
Indian Pharma Market
9.4
14.4
6.1
-6.1
14.6
10.4
21.4
15.6
7.9 8.3
12.213.4
24.7
14.0
10.0
14.4
17.4
-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 R
eddys
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 Feb'20 Feb'19 % Jan'20 %
Anti-Infectives 1641 1438 14.1 1574 4.2
Cardiac 1562 1378 13.3 1612 -3.1
GI 1301 1173 10.9 1278 1.8
Anti Diabetic 1162 1047 11.0 1204 -3.5
Respiratory 1053 893 17.9 1032 2.1
Vitamins 988 888 11.2 984 0.4
Pain 806 721 11.8 793 1.6
Derma 792 722 9.8 812 -2.5
Neuro 737 664 10.9 750 -1.8
Gynaecological 582 545 6.9 587 -0.8
Anti-Neoplastics 242 232 4.4 254 -4.7
Hormones 216 199 8.8 227 -4.7
Ophthal 208 192 8.0 206 0.8
Vaccines 197 176 12.3 197 0.3
Urology 158 138 14.8 160 -1.0
Blood Related 135 112 20.5 138 -1.7
Others 122 102 18.9 117 4.0
Sex Stimulants 70 61 14.5 72 -3.8
Stomatologicals 65 56 15.5 66 -1.5
Anti Malarials 35 32 8.8 35 -1.1
Source: ICICI Direct Research; AIOCD
Top brands in Indian pharma market (MAT;
| crore)
Source: ICICI Direct Research; AIOCD
Acute vs. chronic vs. sub chronic
Source: ICICI Direct Research; AIOCD; As per AIOCD MAT Feb 2020
Acute
47%
Chronic
33%
Sub
Chronic
20%
Brand Company Therapy Feb'20YoY %
Mixtard Abbott Anti Diabetic 553 6.5
Glycomet GpUSV Anti Diabetic 499 7.6
Lantus Sanofi IndiaAnti Diabetic 493 3.4
Janumet MSD Anti Diabetic 479 9.2
Augmentin GSK Anti-Infectives457 20.5
Liv 52 Himalaya GI 408 5.2
Duphaston Abbott Hormones 384 9.0
Clavam Alkem Anti-Infectives377 9.3
Monocef Aristo Anti-Infectives375 25.1
Galvus Met Novartis Anti Diabetic 372 -19.1
ICICI Securities | Retail Research 3
ICICI Direct Research
Monthly Sector Update | Health Check
Exhibit 3: Domestic formulations – market share (MAT value February 2020)
Source: ICICI Direct Research, AIOCD
Exhibit 4: Acute vs. chronic vs. sub chronic (MAT value February 2020)
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
39 40
57
2942
52
78
40
81
66
27
88
44
59
44 4127
54
3950
24
6245 28
9
43
527
57
1
51 18 5244
52
30
2210
199 13
2013 17 13
715 11
5
23
415
21 16
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 February 2020)
Sun Brand Therapy Sales
1 Rosuvas Cardiac 283
2 Levipil Neuro 281
3 Volini Pain 261
4 Istamet Anti Diabetic 253
5 Gemer Anti Diabetic 208
Cipla Brand Therapy Sales
1 Foracort Respiratory 331
2 Budecort Respiratory 242
3 Duolin Respiratory 227
4 Seroflo Respiratory 193
5 Asthalin Respiratory 180
Cadila Brand Therapy Sales
1 Deriphyllin Respiratory 168
2 Skinlite Derma 158
3 Atorva Cardiac 140
4 Mifegest Kit Gynaecological 135
5 Pantodac GI 132
Lupin Brand Therapy Sales
1 Gluconorm-G Anti Diabetic 249
2 Huminsulin Anti Diabetic 178
3 Budamate Respiratory 133
4 Gibtulio Anti Diabetic 125
5 Ondero Anti Diabetic 111
Torrent Brand Therapy Sales
1 Shelcal Vitamins 224
2 Chymoral FortePain 162
3 Nikoran Cardiac 114
4 Azulix-Mf Anti Diabetic 104
5 Nexpro Rd GI 101
Dr. Reddys Brand Therapy Sales
1 Omez GI 158
2 Omez D GI 135
3 Econorm GI 128
4 Atarax Derma 115
5 Razo D GI 92
Glenmark Brand Therapy Sales
1 Telma Cardiac 283
2 Telma H Cardiac 222
3 Telma Am Cardiac 137
4 Candid Derma 122
5 Ascoril Ls Respiratory 117
IPCA Brand Therapy Sales
1 Zerodol Sp Pain 199
2 Zerodol P Pain 129
3 Hcqs Anti Malarials 121
4 Folitrax Anti-Neoplastics 66
5 Zerodol Th Pain 54
Alembic Brand Therapy Sales
1 Azithral Anti-Infectives 165
2 Althrocin Anti-Infectives 86
3 Wikoryl Respiratory 72
4 Roxid Anti-Infectives 53
5 Gestofit Gynaecological 45
Natco Brand Therapy Sales
1 Velpanat Anti-Infectives 175
2 Hepcinat Anti-Infectives 162
3 Geftinat Anti-Neoplastics 124
4 Erlonat Anti-Neoplastics 105
5 Natdac Anti-Infectives 95
Indoco Brand Therapy Sales
1 Febrex Plus Respiratory 90
2 Cyclopam GI 54
3 Oxipod Anti-Infectives 52
4 Sensodent-K Stomatologicals 51
5 Atm Anti-Infectives 49
Ajanta Brand Therapy Sales
1 Met Xl Cardiac 108
2 Atorfit Cv Cardiac 50
3 Melacare Derma 50
4 Feburic Pain 35
5 Rosutor Gold Cardiac 27
Biocon Brand Therapy Sales
1 Insugen Anti Diabetic 112
2 Basalog Anti Diabetic 84
3 Canmab Anti-Neoplastics 60
4 Erypro Blood Related 34
5 Insugen R Anti Diabetic 25
Abbott Brand Therapy Sales
1 Mixtard Anti Diabetic 553
2 Duphaston Gynaecological 384
3 Thyronorm Hormones 350
4 Novomix Anti Diabetic 302
5 Phensedyl Cough LinctusRespiratory 286
Sanofi Brand Therapy Sales
1 Lantus Anti Diabetic 493
2 Combiflam Pain 191
3 Allegra Respiratory 190
4 Amaryl M Anti Diabetic 160
5 Hexaxim Vaccines 152
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 February 2020)
Sun Therapy Sales (|cr)
1 Cardiac 2041
2 Neuro 1945
3 GI 1419
4 Anti-Infectives 1217
5 Anti Diabetic 1064
Cipla Therapy Sales (|cr)
1 Respiratory 2290
2 Anti-Infectives 1453
3 Cardiac 870
4 GI 410
5 Urology 378
Cadila Therapy Sales (|cr)
1 Anti-Infectives 891
2 Cardiac 810
3 Respiratory 649
4 GI 637
5 Pain 572
Lupin Therapy Sales (|cr)
1 Cardiac 1274
2 Anti Diabetic 1264
3 Anti-Infectives 744
4 Respiratory 668
5 GI 387
Torrent Therapy Sales (|cr)
1 Cardiac 1346
2 GI 718
3 Neuro 652
4 Vitamins 561
5 Anti Diabetic 363
Dr. Reddys Therapy Sales (|cr)
1 GI 783
2 Cardiac 456
3 Derma 379
4 Respiratory 284
5 Anti Diabetic 252
Glenmark Therapy Sales (|cr)
1 Cardiac 890
2 Derma 890
3 Respiratory 588
4 Anti-Infectives 428
5 Anti Diabetic 291
IPCA Therapy Sales (|cr)
1 Pain 587
2 Cardiac 325
3 Anti Malarials 310
4 Anti-Infectives 145
5 GI 134
Alembic Therapy Sales (|cr)
1 Anti-Infectives 370
2 Cardiac 263
3 Respiratory 226
4 GI 198
5 Gynaecological 185
Natco Therapy Sales (|cr)
1 Anti-Infectives 525
2 Anti-Neoplastics 520
3 Pain 33
4 Cardiac 4
5 Others 2
Indoco Therapy Sales (|cr)
1 Stomatologicals 167
2 Respiratory 162
3 Anti-Infectives 158
4 GI 126
5 Vitamins 81
Ajanta Therapy Sales (|cr)
1 Cardiac 346
2 Ophthal 205
3 Derma 138
4 Pain 51
5 Vitamins 29
Biocon Therapy Sales (|cr)
1 Anti Diabetic 255
2 Anti-Neoplastics 123
3 Blood Related 37
4 Anti-Infectives 26
5 Derma 18
Abbott Therapy Sales (|cr)
1 Anti Diabetic 1736
2 GI 1529
3 Vitamins 925
4 Anti-Infectives 772
5 Neuro 734
Sanofi Therapy Sales (|cr)
1 Anti Diabetic 948
2 Cardiac 490
3 Vaccines 411
4 Respiratory 333
5 Pain 273
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
DGFT restricts export of 13 APIs and their formulations
The Directorate General of Foreign Trade (DGFT) has restricted the export
of 13 active pharmaceutical ingredients (API) and their formulations amid
supply issues stemming from the Coronavirus outbreak. The restricted list
comprising some vitamins, antibiotics and paracetamol implies that
companies will have to get a no-objection certificate from the government
before exporting these products.
Taro recalls seizure drug in US
Sun Pharma's US subsidiary, Taro Pharma, has issued a voluntary recall of
two lots of Phenytoin oral suspension, 125 mg/5 mL down to the consumer
level in US. The drug, indicated for treatment of grand mal and temporal
lobe seizures, is being recalled as the product may not re-suspend when
shaken, which could result in under/overdosing.
Perrigo gets USFDA approval for gProair
In an adverse turn of events for Lupin, USFDA has granted Perrigo, partner
Catalent Pharma, approval for the first generic version of Teva's 'Proair'
(albuterol sulphate) inhalation aerosol. As per the press release, the drug,
indicated for treatment of bronchospasms (respiratory), had MAT annual
sales of ~US$1.4 billion as per IQVIA.
Due to ongoing complete response letter (CRL), Parrigo has launched this
drug ahead of Lupin. This may impact the expected market share gain for
Lupin post launch.
Abbott launches flu vaccine in India
As per media reports, Abbott India has launched an inactivated vaccine, 0.5
ml in India for treatment of four strains (quadrivalent) of influenza in children
above six months and adults.
Dr Reddys', Lupin launch Vimovo's generic version in US
Dr Reddys' and Lupin both have launched generic version of Horizon
Pharma's Vimovo (Naproxen and Esomeprazole Magnesium) delayed-
release tablets, 375/20 mg and 500/20 mg in the US. The drug, indicated for
treatment of arthritis, had US sales of ~US$400 million as per IQVIA MAT
January 2020.
Lawsuits, court rulings, settlements, regulatory issues
Aurobindo's Unit XII receives six observations
As per media reports, Aurobindo's formulations facility (Unit XII) has
received Form 483 with six observations from USFDA post cGMP inspection
conducted from February 10-21, 2020.
USFDA rescinds VAI status for Aurobindo's Unit IV
In a surprisingly odd turn of events, USFDA rescinded the voluntary action
indicated (VAI) status issued (on February 18, 2020) to Aurobindo Pharma's
Unit IV, general injectable formulation facility at Pashamylaram, Hyderabad.
The VAI was issued for the inspection conducted from November 4-13,
2019, which had resulted in 14 observations.
This does not bode well for the company since it has 46 pending filings
(~30% of total pending filings) including 50-60% of pending injectables that
have been filed from this plant. The stock is likely to give back all the gains
post the VAI classification. The company has four other plants under USFDA
scrutiny (Unit XI: warning letter & Unit VII/I/IX have official action indicated
(OAI) status).
Biocon's insulin facility in Malaysia gets three observations
Biocon's Malaysian insulin manufacturing facility has received three Form
483 observations after the pre-approval inspection (PAI) for Insulin Glargine
ICICI Securities | Retail Research 7
ICICI Direct Research
Monthly Sector Update | Health Check
conducted by USFDA from February 10-21, 2020. As per the press release,
the company believes that the observations are procedural in nature and
should not impact commercialisation plans for the product in US.
Dr Reddys' Vizag facility receives EIR indicating audit closure
USFDA has issued an establishment inspection report (EIR) to Dr Reddys'
formulations manufacturing facility (Vizag SEZ Plant 1 - FTO 7) at Duvvada,
Visakhapatnam indicating audit closure in addition to the earlier voluntary
action indicated (VAI) classification. The facility had received eight Form 483
observations after the USFDA inspection conducted earlier in August, 2019.
Sun Pharma violates disclosure norms as per Sebi audit
As per media reports, Sebi has concluded that Sun Pharma has violated its
disclosure norms by failing to reveal related-party transaction with Aditya
Medisales (AML) that was owned by Sun's promoters and distributed its
products in India. However, the probe has not confirmed the alleged
misappropriation of | 42,000 crore worth of funds. Sources also say that
Sebi has recommended adjudication proceedings against the company
under Section 15 of the Sebi Act.
Aurobindo's Hyderabad API unit receive EIR with VAI status from USFDA
Aurobindo Pharma's API facility (Unit VIII: Gaddapotharam) at Hyderabad
receives establishment inspection report (EIR) with voluntary action
indicated (VAI) status from USFDA. The facility had earlier received four
Form 483 observations after inspection conducted in October 21-25, 2019.
Cipla's Goa facility receives warning letter from USFDA
Cipla's Goa manufacturing facility received a warning letter from the USFDA
for the inspection conducted from September 16-27, 2019 post which the
unit had received 12 observations. The facility had received official action
indicated (OAI) classification in January 2020
Biocon’s small molecules API facility at Bengaluru receives two observations
Biocon’s small molecules API facility in Bengaluru received two Form 483
observations from USFDA after the post-approval and GMP inspection
conducted from February 20-26, 2020.
Dr Reddys' integrated product development facility clears USFDA inspection
Dr Reddys' integrated product development organisation (IPDO) at Medchal-
Malkajgiri, Telangana has cleared USFDA audit with no Form 483
observations.
Dr Reddy's Hyderabad facility receives two observations from USFDA
Dr Reddys' formulations plant - 3 at Bachupally, Hyderabad has received one
Form 483 observations after the USFDA inspection.
Cadila receives DCGI approval for Phase-I trials for RA drug
Cadila Healthcare has received DCGI approval for Phase-I clinical trials of its
investigational new drug, 'ZYBK2', a new chemical entity (NCE) for treatment
of rheumatoid arthritis (RA).
Cadila gets DCGI approval for liver disease drug in India
Cadila Healthcare has received DGCI approval for liver disease drug,
Saroglitazar in India. The drug, a new drug application (NDA), is indicated
for treatment of non-cirrhotic non-alcoholic steatohepatitis (NASH).
Dr Reddy's Telangana API facility gets three USFDA observations
Dr Reddys' API manufacturing plant - 5 at Miryalaguda, Nalgonda district,
Telangana has received three Form 483 observations after completion of
USFDA inspection.
ICICI Securities | Retail Research 8
ICICI Direct Research
Monthly Sector Update | Health Check
Natco's Kothur facility receives one USFDA observation
Natco Pharma's Kothur formulations facility has received one observation
related to equipment qualification of a company mill after the USFDA
inspection conducted from March 2-6, 2020.
Hikal's Mahad unit gets shutdown notice from MPCB
The Hikal Mahad unit has got Maharashtra Pollution Control Board's (MPCB)
notice for shutdown due to complaint from Taloja's local community alleging
presence of a tanker carrying company's by-product near Kasadi River. The
company has filed a petition to stay the closure in Bombay High court.
In continuance to the earlier intimation, Hikal later on informed that its
Mahad unit has continued normal operations. The unit contributed | 260
crore (16% group revenue) in FY19.
USFDA accepts Biocon's BLA for Bevacizumab
USFDA has accepted Biocon and Mylan's biologics license application (BLA)
for MYL-14020, a proposed oncology biosimilar to Avastin (Bevacizumab)
for review. The FDA goal date for the same is December 27, 2020.
Cadila's Baddi facility clears USFDA inspection
Cadila's Baddi formulation facility has received no Form 483 observations on
completion of the cGMP and post approval inspection conducted by USFDA
from March 2-9, 2020.
USFDA halts inspections amid Coronavirus outbreak
USFDA has halted inspections for food, drug and medical devices outside
US till April due to Coronavirus outbreak. However, the drug regulator will
consider critical inspections on a case by case basis.
Mylan wins patent claim against Sanofi
Biocon's partner Mylan has won device patent (9526844) litigation in New
Jersey district court against Sanofi Aventis' Lantus Solostar device for its
insulin Glargine product, 'Semglee'. The court found the patent claim 'not
infringed' and 'invalid' for lack of written description. The USFDA target date
for the product is set for June 2020 while the company is likely to
commercialise the product in CY20. As per the company's press release, the
estimated US market opportunity for the product is ~US$2.2 billion.
Alembic Pharma receives four observations for Panelav facility
Alembic Pharma’s general oral solid formulations facility at Panelav has
received Form 483 with four observations at the end of USFDA inspection
carried out in March 9-13, 2020.
M&As, demergers, tie-ups, JVs
Apollo Hospitals may buy out stake in Apollo Gleneagles
As per media reports, Apollo Hospitals may be looking to buy out its stake
from its Malaysian partner, IHH Healthcare Berhad in Apollo Gleneagles, its
50:50 JV hospital in Kolkata.
Glenmark, Hikma sign agreement for Ryaltris in US
Glenmark, Hikma have signed a pact for commercialising Ryaltris
(olopatadine hydrochloride, 665 mcg & mometasone furoate, 25 mcg) nasal
spray in the US. The drug, a new fixed‐dose combination nasal spray of an
antihistamine and a steroid, is indicated for treatment of symptoms
associated with seasonal allergic rhinitis. The company will be responsible
for the development and USFDA approval of the drug and Hikma will
commercialise the drug in the US. Glenmark will receive upfront payment,
milestone payments and royalties from Hikma.
Cadila signs pact with XOMA for immuno-onco drug
Cadila Healthcare and XOMA Corporation have signed a licensing
agreement to develop an IL-2 based immuno-oncology (IO) drug candidate.
Under the terms of the agreement, Cadila will develop and commercialise
ICICI Securities | Retail Research 9
ICICI Direct Research
Monthly Sector Update | Health Check
the drug in India, Brazil, Mexico and other emerging markets and XOMA may
receive sales royalties for those territories while also retaining rights in all
other geographies.
Cadila transfers animal health business to wholly owned subsidiary
Cadila Healthcare's board has approved transfer of its' Animal healthcare
business on a going concern basis to its wholly owned subsidiary, 'Zydus
Animal Health and Investments' (ZAHL) through a definitive agreement.
ZAHL will issue ~227.3 crore preference shares at face value | 10 in
consideration for the transfer.
Others
Apollo Hospital launches Alexa based voice app for doctor appointments
As per media reports, Apollo Hospitals has launched an Amazon Alexa
based voice app, Skill ask Apollo, to book doctor appointments and find
nearby Apollo healthcare providers. The app will provide consumers’ access
to more than 3500 super/multi-specialty doctors (across 72 hospitals)
alongside access to the groups’ chain of pharmacies and clinics.
Sun Pharma facing shortage of hypertension drug in US
As per media reports, Sun Pharma is facing shortage of the generic version
of its hypertension oral drug, Pindolol in US due to a lack of APIs. However,
the company has informed that the API shortage is not stemming from the
China issue.
GSK appoints Sridhar Venkatesh as MD, VP
GSK India has appointed Sridhar Venkatesh as MD & VP effective April 1,
2020. He will be replacing Mr Annaswamy Vaidheesh who will retire from
the company effective March 31, 2020.
Divis commences production at Vizag unit
Divis Lab has commenced production at its DCV-SEZ unit in Chippada
Village, Vishakhapatnam from March 9, 2020.
Narayana to shutdown Chinmaya Heart centre in Bangalore
Narayana Hrudayalaya will shut down operations at its Chinmaya Narayana
Superspeciality Centre (Heart centre) in Chinmaya Mission Hospital,
Bangalore on March 31, 2020 as the contract partner (Karnataka Chinmaya
Seva Trust) wishes to operate the unit by itself from FY21. In FY19, the unit
had generated | 12.5 crore in sales (0.4% group sales) having an EBITDA of
| 2.3 crore (0.6% group).
ANDA approvals
Suven Life has received USFDA approval for calcium acetate oral capsules,
667 mg used to prevent high blood phosphate levels in patients who are on
dialysis.
Lupin has launched the generic version of Bausch Health's diuretic, Edecrin
(Ethacrynic Acid) tablets, 25 mg in the US. The drug, used to reduce swelling
(edema) due to various diseases, had annual sales of ~US$20 million in the
US (IQVIA MAT December 2019). The drug will be manufactured from the
company's Nagpur oral solids facility.
Cadila Healthcare has got ANDA approval for the generic version of Truvada
(Emtricitabine, Tenofovir Disoproxil Fumarate) tablets, 200/300 mg in US.
The company has also received tentative approval for three other strengths
of the drug from USFDA. The drug, used to control HIV infection, will be
manufactured at the company's formulations facility at Ahmedabad SEZ.
Alembic Pharma has received USFDA approval for the generic version of
Galderma's Periostat (Doxycycline Hyclate) tablets, 20 mg in the US. The
drug, indicated as part of periodontitis' treatment process, has an estimated
market size of US$7 million as per IQVIA MAT December 2019.
ICICI Securities | Retail Research 10
ICICI Direct Research
Monthly Sector Update | Health Check
Exhibit 7: One year forward PE
Source: ICICI Direct Research, Bloomberg
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 PharmaAJAPHA 1277 1,525 Buy 11183 43.5 53.0 63.4 76.2 29.3 24.1 20.1 16.8 21.8 24.1 23.2 23.9 17.1 18.0 18.6 19.1
Alembic PharmaALEMPHA 561 620 Hold 10514 31.4 44.3 26.6 31.0 17.8 12.7 21.1 18.1 19.6 21.6 13.4 14.9 21.8 24.9 13.3 13.8
Apollo HospitalsAPOHOS 1514 2,060 Buy 21103 17.0 24.5 41.6 69.8 89.3 61.9 36.4 21.7 8.8 10.9 14.3 17.6 7.1 9.1 12.9 18.5
Aurobindo PharmaAURPHA 423 630 Hold 24782 42.1 45.5 56.9 62.9 10.0 9.3 7.4 6.7 15.9 16.3 15.8 16.7 17.7 16.2 17.1 16.1
Biocon BIOCON 282 310 Hold 33924 6.2 7.5 10.3 15.7 45.5 37.5 27.4 18.0 10.9 12.9 15.1 19.4 12.2 12.3 14.7 18.6
Cadila HealthcareCADHEA 257 285 Hold 26279 18.1 13.3 15.6 19.0 14.2 19.4 16.4 13.5 13.0 10.1 11.1 12.6 17.8 12.1 12.8 13.9
Cipla CIPLA 416 490 Hold 33620 18.6 20.6 22.3 27.3 22.4 20.2 18.6 15.2 10.9 12.7 13.1 14.6 10.0 10.1 10.0 11.1
Divi's Lab DIVLAB 1964 1,990 Hold 52166 51.0 50.1 58.4 71.0 38.5 39.2 33.6 27.6 25.5 21.8 21.8 22.8 19.4 16.7 16.8 17.5
Dr Reddy's LabsDRREDD 2924 3,520 Hold 48424 114.8 107.5 148.2 175.9 25.5 27.2 19.7 16.6 11.1 8.6 14.1 16.8 13.6 11.5 14.0 14.6
Glenmark PharmaGLEPHA 234 340 Hold 6582 26.9 26.8 33.9 42.5 8.7 8.7 6.9 5.5 15.3 13.1 14.3 15.9 13.5 12.0 13.3 14.4
Hikal HIKCHE 89 160 Buy 1594 8.4 9.6 11.1 13.3 10.6 9.3 8.0 6.7 14.3 13.3 13.6 14.5 13.6 14.1 14.2 14.9
Ipca LaboratoriesIPCLAB 1307 1,560 Buy 16462 35.1 57.2 64.5 78.0 37.3 22.8 20.2 16.8 15.0 21.1 20.7 21.4 14.2 19.6 18.7 19.0
Indoco remediesINDREM 192 240 Hold 1768 -0.3 3.0 8.4 15.1 -611.5 65.2 22.9 12.7 1.0 4.6 9.3 15.3 -0.4 4.0 10.1 15.4
Lupin LUPIN 613 675 Hold 27834 16.5 -35.6 18.0 30.7 37.1 -17.2 34.0 20.0 9.4 8.6 7.8 12.2 5.4 -12.2 5.9 9.3
Narayana HrudalayaNARHRU 293 430 Buy 5947 2.9 7.2 9.8 13.3 100.9 40.9 30.0 22.0 7.7 12.0 13.9 16.5 5.5 12.2 14.5 16.7
Natco PharmaNATPHA 559 650 Hold 10153 34.9 26.9 24.6 23.4 16.0 20.8 22.8 23.9 21.3 14.6 12.7 11.3 18.5 12.6 10.4 9.1
Sun Pharma SUNPHA 387 460 Hold 93032 15.9 17.7 18.4 23.0 24.4 21.9 21.0 16.9 10.3 10.8 10.6 11.9 9.2 9.4 9.0 10.1
Syngene Int. SYNINT 269 360 Buy 10780 8.3 10.5 9.6 12.0 32.6 25.7 31.7 25.6 14.8 13.7 13.1 15.1 16.8 14.7 14.1 14.9
Torrent PharmaTORPHA 2008 2,020 Hold 34077 48.9 56.1 71.5 91.8 41.0 35.8 28.1 21.9 14.2 15.7 18.4 21.2 17.5 17.4 19.1 20.7
RoE (%)EPS (|) PE(x) RoCE (%)
Source: ICICI Direct Research, Bloomberg
0.0
10.0
20.0
30.0
40.0
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
x
NSE500 Index NSE Pharma
24% Premium
ICICI Securities | Retail Research 11
ICICI Direct Research
Monthly Sector Update | Health Check
RATING RATIONALE
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
ICICI Securities | Retail Research 12
ICICI Direct Research
Monthly Sector Update | Health Check
ANALYST CERTIFICATION
We /I, Siddhant Khandekar, Inter CA, Mitesh Shah, CFA, Sudarshan Agarwal, PGDM (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 views about 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. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned
in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.
Terms & conditions and other disclosures:
ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI
Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI
Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance,
general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment
banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons
reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing
on a company's fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical
Research Reports.
Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.
ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions
expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.
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 a reasonable basis, ICICI Securities is 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 might be 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 shall 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 on investment may vary because of changes in interest rates, foreign
exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever 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 or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other
assignment in the past twelve months.
ICICI Securities or its associates might have received any 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 managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or
specific transaction.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did
not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI
Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives 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.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject
company/companies mentioned in this report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.
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.