Covid-19 Helps Indian Drugmakers Rebound In Their Biggest Market

Most Indian drugmakers witnessed an improvement in sales in the U.S., the largest market for many, on new launches and as pharmacies and customers stocked medicines amid the new coronavirus pandemic.While sales of Lupin Ltd., Dr. Reddy’s Laboratories Ltd. and Aurobindo Pharma Ltd. in the American market rose both sequentially and year-on-year, Sun Pharmaceutical Industries Ltd. witnessed a growth over the previous quarter. Cipla Ltd. was an exception as its U.S. sales fell both over the preceding three months and a year earlier despite a double-digit growth in the full fiscal..India’s generic drugmakers have seen growth slow down as competition took away pricing power in the U.S., shrinking margins. Increased competition and pricing pressure in the U.S. have also forced Indian pharma companies to look at specialty and novel drugs to reduce their dependence on highly competitive generics, as well as turn their focus back home..Here’s a snapshot of how the drugmakers performed and their outlook:.Sun Pharma.U.S. BusinessHigher growth in specialty business, driven by improving sales of Ilumya (used to treat moderate-to-severe plaque psoriasis), Cequa (dry eye), and Yonsa (prostate cancer) aided the drugmaker.ProfitOne-offs due to changes or provisions for certain litigation of Rs 260 crore and forex loss hampered the performance.OutlookThe company said fresh launches from its pipeline of 98 abbreviated new drug application and five new drug applications and business development opportunities are expected to aid business.Analyst ViewMorgan Stanley values Sun Pharma at 12% higher price-to-earnings than the large-cap industry average.The company has new growth engines—specialty, leadership in domestic market and sizeable and growing businesses, it said..Sun Pharma Q4 Results: Profit Tumbles On Litigation Costs, Revenue Rises.Dr. Reddy’s.U.S. BusinessNew launches, scaling up existing products and a favorable forex rate helped the company post double-digit sales growth.It launched five new products during the quarter and 27 during the year.ProfitNet profit more than doubled over the previous year to Rs 764 crore in the quarter ended March.Continued growth in the U.S. sales, control on selling, general and administrative expenses and lower taxes improved profitability, HSBC Global Research said in a note.OutlookThe company guided for 25 new launches in the U.S.99 generics are pending approvals, including gNuvaRing (prevent pregnancy), gCopaxone (multiple sclerosis treatment), gKuvan (hyperphenylalaninaemia), gCiprodex (treating ear infections), and potentially gRevlimid (used to treat anemia and multiple myeloma).Analyst ViewWhile the U.S. will remain the largest segment for Dr. Reddy’s in the near- to medium term, it’s making gradual progress towards its goal of creating a well-diversified business model, according to HSBC Global Research,A notable progress in India formulation sales and a strong ramp-up in European Union sales in recent quarters are testimonies for this progress..Dr. Reddy’s Q4 Results: Profit More Than Doubles On Higher Sales In U.S., Europe.Lupin.U.S. BusinessLaunched six products during the quarter in the U.S. market.The company also bets on increased demand for medicines found effective in the treatment of Covid-19, with a U.S. Food and Drug Administration progress for Albuterol (used to treat asthma).It also doubled the capacity for Azithromycin (used to treat bacterial infections), for which it has the highest market share.ProfitHigher other income, lower effective tax rate and exceptional gain from divestment of stake in Kyowa Pharmaceutical Industry Co. boosted profit after tax.OutlookThe company charted out a product and cost rationalisation drive. The result of this drive, according to ICICI Securities, could be visible in two to three years.Analyst ViewPrabhudas Lilladher expects the company’s U.S. business to get back on track and lead the growth over FY20-22.That’s because of resolution of Somerset, Goa and Pithampur (unit-2) facilities in FY21, early launch of Albuterol (used to treat breathing difficulty), ramp up of Levothyroxyn (used to treat low thyroid activity), and launch of complex injectables, biosimilar and Spiriva (asthma) in FY22..Cipla.U.S. BusinessLaunch of Esomeprazole (used to treat certain stomach and esophagus problems) for oral suspension and optimisation of intellectual property-led opportunities scaled the U.S. business.ProfitHigher expenses, largely driven by remediation of Goa unit and other growth-linked investments, impacted profit in the quarter ended March.OutlookThe company sees a healthy launch pipeline for the year and has seen traction in the last two months with the launch of Albuterol (used to treat breathing difficulty) and Esomeprazole (certain stomach and esophagus problems) for oral suspension.It hopes to resolve the regulatory issue at its Goa plant.Analyst ViewCentrum Broking expects some revival for Cipla to come in the ongoing financial year on two-three limited competition approvals in the U.S..Cipla Q4 Results: Profit Falls 33%, Margin Contracts.Aurobindo Pharma.U.S. BusinessLaunched four products during the quarter and 34 products, including seven injectables, during the year.ProfitLower tax rate, better operating margins and revenue growth aided profitability.OutlookThe drugmaker plans to reduce debt $200-250 million in the financial year ending March 2021.It expects to be debt free by 2022.The U.S. momentum will stay with more than 50 filings and launches.Analyst ViewAccording to Emkay Global, strong execution across markets and debt reduction should continue to drive the stock’s outperformance.The stock is one of the top large-cap picks with a significant overweight in the brokerage’s portfolio..(The reasons for a jump in U.S. sales for Indian drugmakers and their outlook have been compiled from their exchange filings and earnings conference call.)

Covid-19 Helps Indian Drugmakers Rebound In Their Biggest Market

Here’s how Indian drugmakers fared in the fourth quarter...

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