The share prices of pharmaceutical companies are in focus after multiple drugmakers launched generic semaglutide in India following the March 20 patent expiry, with brokerages highlighting a sharp expansion opportunity in the diabetes and weight-loss market.
Nomura, in a March 23 note, said the semaglutide opportunity could exceed Rs 12,000 crore over the next five years, as lower pricing drives wider adoption and volumes scale up.
Zydus gets ‘Buy’ on differentiated product and strong partnerships
Nomura has a ‘Buy’ rating on Zydus Lifesciences, with the stock at Rs 891 and a target price of Rs 1,140, implying about 28% upside.
According to the report, the brokerage firm is optimistic about Zydus’ differentiated reusable, dose-adjustable pen, which is said to improve patient convenience and lower long-term costs. The report further added that the company’s licensing tie-ups with Lupin and Torrent strengthened distribution in the diabetes segment.
The brokerage estimates Zydus could capture nearly 15% market share, supported by both its own brands and partner-led sales.
Alkem’s aggressive pricing drives ‘Buy’ rating, highest upside
Alkem Laboratories is also rated ‘Buy’, with the stock at Rs 5,258 and a target price of Rs 6,890, indicating a 31% upside, the highest among peers.
According to the brokerage firm, Alkem sees a bright light at the end of the tunnel because of its low pricing, which could help it attract more users and gain over 5% of the market share. The report further added that the company also has better control over its product and supply chain. Nomura also flagged Alkem’s smaller presence in the diabetes segment as a limitation.
Sun Pharma, Dr Reddy’s rated ‘Buy’ on scale and market access
Nomura maintains a ‘Buy’ rating on Sun Pharmaceutical Industries, with the stock at Rs 1,777 and a target price of Rs 1,920, implying about 8% upside.
According to the report, Sun Pharma has a strong front-end presence and leadership in chronic therapies, which could help drive sales even though its semaglutide product is expensive and not very different from peers.
Dr Reddy’s Laboratories is also rated ‘Buy’, with the stock at Rs 1,299 and a target price of Rs 1,600, suggesting a ~23% upside. The brokerage expects the company to benefit from its tie-ups with USV and Torrent, which could help it grow volumes and capture around 10% market share.
Torrent remains ‘Neutral’ despite early oral launch
In contrast, Nomura has a ‘Neutral’ rating on Torrent Pharmaceuticals, with the stock at Rs 4,270 and a target price of Rs 4,670, implying a 9% upside.
Torrent may have been the first to launch an oral version of semaglutide, but Nomura remains cautious. Oral versions haven’t seen strong demand globally, and sales have been declining, which makes it unclear how much market share the company can actually gain, despite the convenience they offer.
Pricing, differentiation to decide winners
According to the report, pricing and product design will play a critical role when the competition intensifies. While most companies have priced disposable pens at Rs 4,200–5,200 per month, Alkem’s offering is as low as Rs 2,000, and vial formulations go down to Rs 1,290 per month.
Reusable pens from Zydus and Alkem are expected to see stronger adoption due to a better balance of cost and convenience. The report further added that vial formulations may remain capped at below 30% market share due to usability challenges.
Large opportunity, but execution key
The brokerage believes semaglutide could become a meaningful growth driver for India’s pharma sector, but as more players enter and pricing pressure builds, execution, pricing strategy and distribution strength will determine long-term winners.
For now, Nomura sees Zydus and Alkem as the most compelling plays, driven by product differentiation and pricing advantage, respectively.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.