Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>In Q3 FY23, <a href="https://www.smartkarma.com/entities/aurobindo-pharma-ltd" target="_blank" data-smartkarma-citation="entities:19974:1" rel="noopener">Aurobindo Pharma (ARBP IN)</a> recorded net profit of INR4.9B (~$60 million), down 19% YoY. Consensus expected the company to report net profit of INR5.2B during the quarter.</li>
<li>Net profit was negatively impacted by 51% YoY increase in R&amp;D expenditure due to biosimilar pipeline progress. R&amp;D expenses are expected to remain high over the next 6–7 quarters.</li>
<li>The company had negative free cash flow of $82M. With lack of any immediate catalyst or shareholders’ reward, we don’t expect multiple expansion for Aurobindo Pharma at least in near-term.</li>
</ul>


In Q3 FY23, Aurobindo Pharma (ARBP IN) recorded net profit of INR4.9B (~$60 million), down 19% YoY. Consensus expected the company to report net profit of INR5.2B during the quarter.
Net profit was negatively impacted by 51% YoY increase in R&amp;D expenditure due to biosimilar pipeline progress. R&amp;D expenses are expected to remain high over the next 6–7 quarters.
The company had negative free cash flow of $82M. With lack of any immediate catalyst or shareholders’ reward, we don’t expect multiple expansion for Aurobindo Pharma at least in near-term.


Aurobindo Pharma (ARBP IN): Q3 Net Profit Dropped; R&D Cost To Remain Elevated in Near-Term

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>In Q3FY23, the Pharma sector is expected to benefit from positive attributes such as currency depreciation, fall in raw material prices, low crude prices, and correction in shipping prices which would aid in revenue growth and improvement in gross margins.</li><li>We expect the Pharma universe under our coverage to report healthy aggregate Revenue/EBITDA/PAT growth of 7.4%/9.5%/9.1% YoY. 8% depreciation in the Indian currency (Rs) may majorly contribute to the overall growth of 7.4% for the last quarter.</li><li>Low single-digit growth in the US market (due to intense competition) and low double-digit growth in the India business after Covid-19 business has now stabilised. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

In Q3FY23, the Pharma sector is expected to benefit from positive attributes such as currency depreciation, fall in raw material prices, low crude prices, and correction in shipping prices which would aid in revenue growth and improvement in gross margins.We expect the Pharma universe under our coverage to report healthy aggregate Revenue/EBITDA/PAT growth of 7.4%/9.5%/9.1% YoY. 8% depreciation in the Indian currency (Rs) may majorly contribute to the overall growth of 7.4% for the last quarter.Low single-digit growth in the US market (due to intense competition) and low double-digit growth in the India business after Covid-19 business has now stabilised. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul>
<li>As we are heading into 2023, let us look back on the performance of some of our global healthcare stocks recommended throughout 2022.</li>
<li>Four stocks on which I am bullish, generated more than 50% return since their recommendations. 10 stocks on which I am bearish plunged more than 20%.</li>
<li>For 2023, investors should continue to focus on established healthcare companies, having strong and flexible balance sheet with muti-year revenue visibility.</li>
</ul>


As we are heading into 2023, let us look back on the performance of some of our global healthcare stocks recommended throughout 2022.
Four stocks on which I am bullish, generated more than 50% return since their recommendations. 10 stocks on which I am bearish plunged more than 20%.
For 2023, investors should continue to focus on established healthcare companies, having strong and flexible balance sheet with muti-year revenue visibility.


2022 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

ICICI Securities Ltd

ICICI Securities Limited provides investment services. The Company provides corporate and investment banking, securities, wealth management, retail brokerage, initial public offerings, and advisory services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul>
<li>Aurobindo is a significant global generics player with 28 manufacturing facilities, including eight key formulations facilities in India and abroad along with three R&amp;D centres.</li>
<li>The current employee strength is more than 8000, which includes more than 750 scientists.</li>
<li>FY22, API: formulations ratio was at 15:85. US formulations constitute 47% of revenues followed by Europe (28%), APIs (15%), RoW (6%) &amp; ARV (4%) </li>
</ul>
<p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>


Aurobindo is a significant global generics player with 28 manufacturing facilities, including eight key formulations facilities in India and abroad along with three R&amp;D centres.
The current employee strength is more than 8000, which includes more than 750 scientists.
FY22, API: formulations ratio was at 15:85. US formulations constitute 47% of revenues followed by Europe (28%), APIs (15%), RoW (6%) &amp; ARV (4%) 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Aurobindo Pharma - US Drags Down Overall Performance; Outlook Cautious

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>ARBP delivered a 2QYF23 earnings miss, led by lower-than-expected US and ARV sales.</li><li>Sales from Europe (EU) were stable YoY in CC terms, with a pickup in API sales.</li><li>We cut our FY23/FY24 earnings estimate by 18%/13% to factor in: a) reduced demand for Injectables, led by shelf stock adjustment, b) considerable price erosion in the base portfolio in the US segment, c) adverse currency impact in the EU business, and d) increased R&amp;D spends.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

ARBP delivered a 2QYF23 earnings miss, led by lower-than-expected US and ARV sales.Sales from Europe (EU) were stable YoY in CC terms, with a pickup in API sales.We cut our FY23/FY24 earnings estimate by 18%/13% to factor in: a) reduced demand for Injectables, led by shelf stock adjustment, b) considerable price erosion in the base portfolio in the US segment, c) adverse currency impact in the EU business, and d) increased R&amp;D spends.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Aurobindo Pharma - Price Erosion in the US and Higher OPEX Impacts Earning

India

Aurobindo Pharma Limited manufactures and markets oral and sterile antibiotics, antibacterials, anti-ulcerants and other generic basic drugs. Products include semi-synthetic penicillin drugs like ampicillin and amoxycillinas well as antibiotics, which include cloxacillin and dicloxacillin. The Company also manufactures formulations like astemizole, domeperidone and omeprazole.

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Aurobindo Pharma (ARBP IN)