CADI’s base US business seems to have bottomed in 2QF17. We expect 2HFY17 to be better, driven by prospects of 7-8 new approvals including 3-4 controlled substances from Nesher. We expect strong growth momentum from FY18 onwards, largely driven by approvals of a few niche site transfers, etc. Plus, IP build-up (bio-similars, Lipaglyn) and reasonable valuation drive our OW rating on the stock.
Cadila continues to expect 40 ANDA filings for FY17 (10 filings in 1HF17). ANDA filings (site transfer) for key products – Prevacid ODT and Toprol XL – are expected.
R&D is expected to be flat in absolute value terms in FY17 (R7.6 billion in FY16), but would rise in FY18 on account of Lipaglyn clinical trials (7-8% of sales in medium to long term).
Tax rate to be 22-25% in FY17/18 while capex to be around R10 billion. Moraiya — all the remediation measures have been completed, and FDA has been invited for re-inspection. Oral facility at Ahmedabad and Topical SEZ have both received EIRs; b) Biosimilar business is currently around R3 billion (mostly in India). It is in the process of registering several EMs (all 7 products) and expects signifiant traction in FY18 ($500 m sales target in next 5-7 years); c) lower export incentives in Q2 due to Asacol HD; d) It filed and launched 4 products during the quarter; e) India business expected to grow 15% in medium term.