Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<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> is selling its U.S.-based CDMO business, Metrics Contract Services for $475 million. The transaction is expected to close by the end of 2022.</li>
<li>Allowing for reinvestment needs, the net proceeds from the sale will be used to repay the syndicated debt facility and return surplus capital to shareholders.</li>
<li>Combined oral contraceptive Nextstellis remains the company’s most significant commercial opportunity. While Nextstellis was launched in the U.S. in June 2021, Mayne has launched Nextstellis in Australia in July 2022.  </li>
</ul>



Mayne Pharma (MYX AU) is selling its U.S.-based CDMO business, Metrics Contract Services for $475 million. The transaction is expected to close by the end of 2022.
Allowing for reinvestment needs, the net proceeds from the sale will be used to repay the syndicated debt facility and return surplus capital to shareholders.
Combined oral contraceptive Nextstellis remains the company’s most significant commercial opportunity. While Nextstellis was launched in the U.S. in June 2021, Mayne has launched Nextstellis in Australia in July 2022.  


Mayne Pharma (MYX AU): CDMO Business Sale- A Step Towards Focus Solely on Specialty Pharma

Dr. Reddy's Laboratories / Equity Bottom-Up

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<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> reported 15% y/y growth in revenue in Q4, driven by strong performance across all the markets. Adjusted for one-offs, net profit grew 54% y/y.</li>
<li>Despite pricing pressure, the U.S. business should continue its growth momentum with better traction in key products launched in FY22 and upcoming new launches, including generic version of Revlimid.</li>
<li>Inflationary pressure (raw material, freight), lower offtake of COVID-related products in India, and currency headwinds in emerging markets are some downside risks for the company.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) reported 15% y/y growth in revenue in Q4, driven by strong performance across all the markets. Adjusted for one-offs, net profit grew 54% y/y.
Despite pricing pressure, the U.S. business should continue its growth momentum with better traction in key products launched in FY22 and upcoming new launches, including generic version of Revlimid.
Inflationary pressure (raw material, freight), lower offtake of COVID-related products in India, and currency headwinds in emerging markets are some downside risks for the company.


Dr. Reddy's Laboratories (DRRD IN) 4QFY22: Double-Digit Sales Growth; One-Off Charge Impacted Profit

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<li>
<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> has been issued six observations for its oral manufacturing unit by the FDA, which will further impact its business. The company closed its New Jersey facility.</li>
<li>Aurobindo’s recent acquisition of Veritaz Health for INR1.7 billion does not really fit for the company's high hope for the domestic formulation business. </li>
<li>Aurobindo shares are trading at a forward P/E of 10.9x, which is cheaper than the peers. However, the company is not expected to see multiple expansion in near future.  </li>
</ul>



Aurobindo Pharma (ARBP IN) has been issued six observations for its oral manufacturing unit by the FDA, which will further impact its business. The company closed its New Jersey facility.
Aurobindo’s recent acquisition of Veritaz Health for INR1.7 billion does not really fit for the company's high hope for the domestic formulation business. 
Aurobindo shares are trading at a forward P/E of 10.9x, which is cheaper than the peers. However, the company is not expected to see multiple expansion in near future.  


Aurobindo Pharma (ARBP IN): Regulatory Issues Continue to Haunt the Company

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Today is the last day of the review period for the June review of the <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a>. Changes become effective at the close on 17 June. </li>
<li>We see <a href="https://www.smartkarma.com/entities/tata-motors-ltd" target="_blank" data-smartkarma-citation="entities:216:1" rel="noopener">Tata Motors Ltd (TTMT IN)</a> and <a href="https://www.smartkarma.com/entities/tata-motors-ltd-a-dvr" target="_blank" data-smartkarma-citation="entities:349:1" rel="noopener">Tata Motors DVR (TTMT/A IN)</a> replacing <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>. <a href="https://www.smartkarma.com/entities/hindalco-industries-ltd" target="_blank" data-smartkarma-citation="entities:18490:1" rel="noopener">Hindalco Industries (HNDL IN)</a> is a close add on sector balance.</li>
<li>The impact on <a href="https://www.smartkarma.com/entities/dr-reddy-s-laboratories-ltd" target="_blank" data-smartkarma-citation="entities:16406:1" rel="noopener">DRRD IN</a> will be higher than on <a href="https://www.smartkarma.com/entities/tata-motors-ltd" target="_blank" data-smartkarma-citation="entities:216:1" rel="noopener">TTMT IN</a>, in terms of days of ADV to trade and days of delivery volume that needs to change hands.</li>
</ul>


Today is the last day of the review period for the June review of the S&amp;P BSE SENSEX Index (SENSEX INDEX). Changes become effective at the close on 17 June. 
We see Tata Motors Ltd (TTMT IN) and Tata Motors DVR (TTMT/A IN) replacing Dr. Reddy's Laboratories (DRRD IN). Hindalco Industries (HNDL IN) is a close add on sector balance.
The impact on DRRD IN will be higher than on TTMT IN, in terms of days of ADV to trade and days of delivery volume that needs to change hands.


SENSEX Index Rebalance Preview: Tata Motors Should Replace Dr. Reddy; Hindalco Is Close

<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> is outperforming the domestic pharma industry and aims to expand its market share. Currently, India business contributes 19% of revenue. </li>
<li>The company’s largest revenue segment, the U.S. generic business continues to see pricing pressure. It plans to launch new products, including complex generics to combat the impact of price erosion.</li>
<li>Dr. Reddy also has around 13% revenue exposure to Russia and other CIS countries. Sharp depreciation of Russian currency will negatively impact revenue from the region.</li>
</ul>



Dr. Reddy's Laboratories (DRRD IN) is outperforming the domestic pharma industry and aims to expand its market share. Currently, India business contributes 19% of revenue. 
The company’s largest revenue segment, the U.S. generic business continues to see pricing pressure. It plans to launch new products, including complex generics to combat the impact of price erosion.
Dr. Reddy also has around 13% revenue exposure to Russia and other CIS countries. Sharp depreciation of Russian currency will negatively impact revenue from the region.


Dr. Reddy's Laboratories (DRRD IN): India Business Is the Only Bright Spot Amid Many Headwinds

India

Cipla Limited manufactures and sells pharmaceutical and personal care products. The Company offers active pharmaceutical ingredients, and formulations in therapeutic areas, such as allergy, analgesic, anti malarial, anti-infectives, cardiology, dermatology and cosmeceuticals, diabetology, gastroenterology, steroids, iron chelators, nutritional products.

Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals.  The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments.

Torrent Pharmaceuticals Ltd. manufactures bulk drugs and pharmaceutical formulations. The Company's formulations include cardio-vascular, psychotropic and anti-biotic drugs while its bulk drugs include atenolol, ciprofloxacin and norfloxacin. Torrent Pharmaceuticals has wholly owned subsidiaries in several regulated and less regulated international markets.

Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine.

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.

Glaxosmithkline Pharmaceuticals Ltd. manufactures and distributes a wide variety of pharmaceutical drugs, veterinary products and laboratory chemicals. The Company's products include "Phexin" capsules, "Betnesol" tablets and injections, "Becoride" asthma treatment, "Betnovate" ointment, "Cetzine" antihistamine, "Zucox" and "Rizap" anti-tuberculosis products.

Glaxosmithkline Pharmaceuticals (GLXO IN)

Abbott India Limited manufactures a wide range of pharmaceutical and medical products, agrochemicals, and animal health products. The Company's medical and pharmaceutical products include insulin injections, anti-dysentery drugs, vitamin preparations, penicillin preparations, sulfonamide tablets, and a variety of household remedies.

Glenmark Pharmaceuticals Ltd., is a pharmaceutical company. The Company develops generic drugs for inflammation, metabolic disorders, and pain.

Alkem Laboratories Limited operates as a pharmaceutical company. The Company researches, develops, manufactures, and markets generic and branded pharmaceuticals. Alkem also provides nutraceuticals, functional foods, health foods, and herbal products.

Ajanta Pharma Limited is a pharmaceutical company involved in the areas of product research, manufacturing, and marketing. The Company's manufacturing capabilities include segments such as antiretrovirals, antimalarials, cardiovascular, dermatology, and ophthalmology. The Company also markets over the counter products that include some nature-based remedies.

CSPC Pharmaceutical Group Limited, through its subsidiaries, manufactures and sells pharmaceutical products.  The Company's products include vitamin C, antibiotics and common generic drugs. The Company is also engages in the development of innovative drugs and antibiotics.

Catalent, Inc. provides delivery technologies and development solutions for drugs, biologics and consumer health products. The Company's oral, injectable, and respiratory delivery technologies address the diversity of the pharmaceutical industry including small molecules, large molecule biologics and consumer health products.

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (600196 CH)

Kyowa Hakko Kirin Co.,Ltd. develops, manufactures, and markets pharmaceuticals. The Company's products include a protein produced by genetic recombination technology, an anti-anemia agent that attaches new sugar chains through partial modification of the amino acid sequence of human erythropoietin (EPO), and a glycoprotein, human erythropoietin.

Yunnan Baiyao Group Co., Ltd. manufactures and markets traditional Chinese medicines.  The Company also operates in pharmaceutical wholesale and retail trading, empty capsules manufacturing, and hotel operation.

Shionogi & Company Ltd., is a pharmaceutical company. The Company develops prescription & over-the-counter drugs and diagnostics.

Zhejiang NHU Co., Ltd. manufactures and markets organic chemical products and feed additive. The Company's products include EMME, Vitamin E and Vitamin A.

Eisai Co., Ltd. produces prescription drugs and medical equipment and sells mainly to sales agents and subsidiaries.  Through its subsidiary, Sanko Junyaku, the Company produces and sells diagnostic drugs.  Eisai also markets its products through related companies in the US, Europe, and Asia.  The Company also manufactures and sells foods, livestock feeds, chemical, and agrochemicals.

Recordati S.p.A. manufactures pharmaceuticals. The Company researches, develops, manufactures, and markets prescription and non-prescription pharmaceuticals, pharmaceutical chemicals, therapeutic products, and rare disease treatments. The Company sells its products throughout the world.

Ipsen SA manufactures and markets a wide range of medical drugs for targeted disease areas including oncology, endocrinology, and neuromuscular disorders.

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)

Mayne Pharma (MYX AU): CDMO Business Sale- A Step Towards Focus Solely on Specialty Pharma

Mayne is selling its U.S. CDMO business for $475 million. Going forward, the company aims to focus on specialty pharmaceuticals, including women...

Tina Banerjee