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

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<li>
<a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a> reported triple-digit revenue growth in branded products division in H1FY23, driven by oral contraceptive Nexstellis, which contributes ~80% of segment sales.</li>
<li>The company had an encouraging start to H2FY23. Both Nexstellis and dermatology are expected to exit FY23 with a positive run-rate contribution.</li>
<li>The company has decided to cancel the previously proposed pro rata capital return and intends to use its cash in a better and productive way.</li>
</ul>



Mayne Pharma (MYX AU) reported triple-digit revenue growth in branded products division in H1FY23, driven by oral contraceptive Nexstellis, which contributes ~80% of segment sales.
The company had an encouraging start to H2FY23. Both Nexstellis and dermatology are expected to exit FY23 with a positive run-rate contribution.
The company has decided to cancel the previously proposed pro rata capital return and intends to use its cash in a better and productive way.


Mayne Pharma (MYX AU): H1 Result- Branded Products on Strong Momentum; Reset for Profitable Growth

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">Dr. Reddy's Laboratories (DRRD IN)</a> entered into a definitive agreement to acquire the U.S. retail generic prescription product portfolio of <a href="https://www.smartkarma.com/entities/mayne-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:757:1" rel="noopener">Mayne Pharma (MYX AU)</a> for $105M.</li>
<li>The deal will add approximately 85 approved generic products and four pipeline products. For the fiscal year ending June 30, 2022, this portfolio generated revenue of $111M.</li>
<li>Considering the revenue potential, the acquisition price seems to be reasonable. Being a high margin and limited competition portfolio, the acquisition will be earnings accretive for Dr. Reddy’s.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) entered into a definitive agreement to acquire the U.S. retail generic prescription product portfolio of Mayne Pharma (MYX AU) for $105M.
The deal will add approximately 85 approved generic products and four pipeline products. For the fiscal year ending June 30, 2022, this portfolio generated revenue of $111M.
Considering the revenue potential, the acquisition price seems to be reasonable. Being a high margin and limited competition portfolio, the acquisition will be earnings accretive for Dr. Reddy’s.


Dr. Reddy's Laboratories (DRRD IN): New Acquisition to Bolster US Generic Product Portfolio

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

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<li>
<a href="https://www.smartkarma.com/entities/mankind-pharma-ltd" target="_blank" data-smartkarma-citation="entities:36389:1" rel="noopener">Mankind Pharma</a> is looking to raise around US$1bn in its upcoming India IPO.</li>
<li>MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.</li>
<li>We have looked at the company background and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.</li>
</ul>



Mankind Pharma is looking to raise around US$1bn in its upcoming India IPO.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at the company background and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.


Mankind Pharma Pre-IPO - Thoughts on Valuations

Dr. Reddy's Laboratories / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">Dr. Reddy's Laboratories (DRRD IN)</a> recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.</li>
<li>Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.</li>
<li>The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.


Dr. Reddy's Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US

India

Dr. Reddy's Laboratories Limited provides a complete range of pharmaceutical services. The Company manufactures bulk drugs and formulations including verapamil and cephalexin. The Company also manufactures and exports molecules such as norfloxacin, ciprofloxacin, and varieties of semi-synthetic penicillin. The Company markets its products in India and around the world.

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Dr. Reddy's Laboratories (DRRD IN)

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

In Q3, Aurobindo Pharma reported 19% YoY decline in net profit and missed consensus expectations due to 51% surge in R&D cost, which is expected to...

Tina Banerjee

Mayne Pharma (MYX AU): H1 Result- Branded Products on Strong Momentum; Reset for Profitable Growth

Mayne reported triple-digit growth in branded products division, driven by Nexstellis. The company had an encouraging start to H2, with improving...

Tina Banerjee