We expect a mixed quarter for the Indian pharma sector. While US business should see strong growth led by exclusivity, base business performance would be muted driven by pricing erosion and increased competition.
The key during the results season though would be updates on facility resolution across companies. We expect SUN/ Lupin (LPC) to report strong results led by exclusivity benefits while DR.REDDY’s Laborataries and Cipla should report muted results.
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We expect a mixed set of results for the sector. Overall we expect revenue growth of c17% led by exclusivity launches and margins to improve c50 bps y-o-y we expect strong results from Sun led by Gleevec and Lupin led by Metformin franchise.
DRRD will likely report a muted set of numbers as key products face competition. In Cipla the key to watch will be base margin trajectory. Facility status still remains the key focus. Similar to the past few quarters, the key focus will remain on facility status.
Most of the companies had talked about completing the remedial work in Q1 FY17 and consequently asking for a meeting with USFDA.
Abbreviated New Drug Application approval pace by FDA has moderated from its Dec-15 highs with 52 monthly approvals in Q1 FY17 vs 63 in Q3 FY16. ANDA approvals have fallen behind filings in CY16.
The share of Indian companies in approvals has dropped sharply with only 40 final approvals in Q1 FY17, the lowest in past five quarters.