Generic pharma industry is seeing structural changes which along with the increased revenue base ($ 2 bn+) is driving Indian pharma's strategy to transition towards speciality products over the next 3yrs.
Generic pharma industry is seeing structural changes which along with the increased revenue base ($ 2 bn+) is driving Indian pharma’s strategy to transition towards speciality products over the next 3yrs. We expect earnings downgrade cycle to continue and near term earnings to see another 10% downgrade as challenges manifest and maintain our cautious view on large caps. We prefer small/mid cap players with differentiated portfolio.
US generic business is witnessing significant structural changes. Channel consolidation has led to an oligopoly in both drugstores and PBM. GDUFDA implementation has led to – nearly doubling of approvals, with further uptick expected and forced companies to raise quality standards.
Domestic pharma industry is seeing substantial regulatory changes. In addition to an active NPPA (National Pharma pricing authority), the regulators are now aiming to streamline and improve the approval process for pharmaceutical products. Though a welcome move, it will impact near term growth for all players. Over the medium term, we expect this to benefit large cap established players.
Indian pharma earnings have seen c20% downgrade over the past 15m. Despite this, earnings growth expectations are still elevated. The expectations of “better growth ahead” are premature, in our view, and we expect another 10%+ earnings cut over the next 12 m.