Pharma cos may see Q4 revenues grow 15%

?Pharma companies under our coverage are estimated to report a 14% growth in their revenues for the fourth quarter of fiscal 2011 mainly driven by a ramp-up in the newer capacities and a favourable change in their product mix, with a high contribution from the branded generics,? said Sapna Jhawar of brokerage firm Sharekhan.

The brokerage firm projects the adjusted profit after tax of pharma firms to grow by 6.2% in a similar period on a year-on-year basis (excluding Piramal Healthcare which has been acquired by Abbott).

?We expect the pharma sector to close FY2011 with a mixed performance in the fourth quarter of financial year 2011. We expect drug firms under our coverage to post 11% year-on-year topline growth,? notes Sarabjit Kour Nangra of Angel Broking. While the estimates of Sharekhan excludes forex impact, Angel Research’s projections include mark-to-market on foreign debt. Brokerage firm IIFL sees the growth to revolve around 15-16%.

Analysts are bullish on the growth performance of Cadila Healthcare, which is expected to record a year-on-year growth of 24 to 30% in the concerned quarter, with its net profit expected to grow in the range of 24 to 34%. The strong performance of Cadila in the quarter would be driven mainly by domestic sales supported by formulation exports and the improved profitability of its foreign subsidiaries.

However, Jhawar feels that increasing cost pressures due to salary hikes, expansion of the field force, regulatory filings and enhancement of production capacities will in turn put margins of pharma firms under pressure. On the domestic front, Indian formulation sales are expected to report a muted performance, partially due to a high base effect of the fourth quarter of the previous fiscal (Piramal Healthcare’s domestic formulation business was acquired by Abbott in the middle of 2010). Jhawar points out that excluding Piramal Healthcare, the domestic growth in the quarter stands to grow at a strong 26.5% year on year. ?A robust growth in the domestic market would be led by Cadila (up 31%), Lupin (29.6%) and Glenmark (29.2%),? she added.

For the quarter, Sun Pharma may post strong top tine growth in the range of 27 to 36% mainly on account of integration of Israeli firm Taro even though consolidated operating performance will suffer due to Taro. ?We expect Ranbaxy?s net sales to decline 13% to R2,164 crore during the first quarter of calender year 2011, as the launch of generic version of Alzheimer drug Aricept (a first to file opportunity) reported below expectation sales in fourth quarter of calender year 2010,” Nangra notes.

Ranbaxy follows the calender year to report its financial performance. ?We expect 20% year-on-year decline in revenue of Ranbaxy on the back of higher base of quarter one of calender year 2010,? IIFL notes.

Ranbaxy?s US revenues had got a major boost in the comparable quarter of the previous year because it sucessfully launched the generic version of GSK’s herpes drug Valtrex in the US, for which it had a 180-day exclusive marketing opportunity. Dr Reddy?s will gain on the back of launch of Allegra D24 along with other molecules in the US market in the concerned quarter.