India domestic formulations market registered a moderate y-o-y growth of 7%. The discontinuation of product schemes/bonus in the domestic business led to the slowdown. We present the bonus % trend for TRP. Management expects growth to pick up 4QFY16 onwards. TRP’s YTD growth in India is 14%.
The sales force was rationalized by 300 representatives in 3QFY16 on account of the merger of select divisions. As a result, the MR (medical representative) productivity improved 31% y-o-y.The company launched Adalimumab in 3QFY16 at one fifth the price of the innovator. TRP’s existing relationship with rheumatologists will likely aid in prescription generation for the product. We maintain a positive outlook towards TRP’s domestic business and have built in growth of 16%/18% during FY16F/FY17F in our estimates.
The stock trades at 21.4x FY17F and 17.5x FY18F base EPS (EPS ex non-sustainable US opportunities) of Rs 63.2 and 77.4, respectively. We find the valuation attractive given the strong domestic business and a strong balance sheet.