Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ajanta-pharma-ltd" target="_blank" data-smartkarma-citation="entities:10053:1" rel="noopener">Ajanta Pharma (AJP IN)</a> has a well-diversified business model in terms of markets and therapies. The company’s largest revenue contributing segment, branded generics is seeing healthy double-digit revenue growth.</li>
<li>Ajanta focuses on limited competition product in US. Going forward, the US business will see accelerated growth, driven by new launches. Ajanta plans to file 10–12 ANDAs during FY23.</li>
<li>Ajanta has taken 1% price increase across all its market, which should drive margin improvement in coming quarters. The company has guided for EBITDA margin of 26–27% for FY23.</li>
</ul>



Ajanta Pharma (AJP IN) has a well-diversified business model in terms of markets and therapies. The company’s largest revenue contributing segment, branded generics is seeing healthy double-digit revenue growth.
Ajanta focuses on limited competition product in US. Going forward, the US business will see accelerated growth, driven by new launches. Ajanta plans to file 10–12 ANDAs during FY23.
Ajanta has taken 1% price increase across all its market, which should drive margin improvement in coming quarters. The company has guided for EBITDA margin of 26–27% for FY23.


Ajanta Pharma (AJP IN): Branded Generics Focus Ensures Consistent Growth

Thematic (Sector/Industry)

<ul>
<li>Most of the large Indian pharmaceutical companies have reported double-digit revenue growth in their respective U.S. business in Q1FY23. New launches are mostly offsetting the impact of price erosion.</li>
<li>Although the companies are still facing price erosion in the U.S. market, the pace has slowed down. Price erosion seems to be near its bottom.</li>
<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> and <a href="https://www.smartkarma.com/entities/zydus-lifesciences-ltd" target="_blank" data-smartkarma-citation="entities:12914:1" rel="noopener">Zydus Lifesciences Ltd (ZYDUSLIF IN)</a> remain our top picks. Aided by new launches both the companies are seeing sustainable recovery in U.S. business.</li>
</ul>


Most of the large Indian pharmaceutical companies have reported double-digit revenue growth in their respective U.S. business in Q1FY23. New launches are mostly offsetting the impact of price erosion.
Although the companies are still facing price erosion in the U.S. market, the pace has slowed down. Price erosion seems to be near its bottom.

Dr. Reddy's Laboratories (DRRD IN) and Zydus Lifesciences Ltd (ZYDUSLIF IN) remain our top picks. Aided by new launches both the companies are seeing sustainable recovery in U.S. business.


Indian Generic Pharmaceutical Companies: The US Business Is Recovering Slowly

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>We are two-thirds of the way through the review period for the December 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 16 December.  </li>
<li>We see <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy (ADANIGR IN)</a> as the highest ranked non-constituent in inclusion zone, while <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 the lowest ranked constituent in deletion zone.</li>
<li>Passive trackers will need to trade over 10 days of delivery volume on <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy (ADANIGR IN)</a> and <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>, so the impact will be significant.</li>
</ul>


We are two-thirds of the way through the review period for the December review of the S&amp;P BSE SENSEX Index (SENSEX INDEX). Changes become effective at the close 16 December.  
We see Adani Green Energy (ADANIGR IN) as the highest ranked non-constituent in inclusion zone, while Dr. Reddy's Laboratories (DRRD IN) is the lowest ranked constituent in deletion zone.
Passive trackers will need to trade over 10 days of delivery volume on Adani Green Energy (ADANIGR IN) and Dr. Reddy's Laboratories (DRRD IN), so the impact will be significant.


SENSEX Index Rebalance Preview: Adani Green Could Replace Dr. Reddy

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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> 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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/piramal-enterprises-ltd" target="_blank" data-smartkarma-citation="entities:14158:1" rel="noopener">Piramal Enterprises (PIEL IN)</a> obtained shareholders nod for demerging its pharma business and consolidated under Piramal Pharma Limited (PPL). Later, PPL will be listed on India stock exchange.</li>
<li>PPL has a differentiated pharmaceutical business model, with three business verticals. CDMO, the largest revenue contributor, has track record of consistent above-market growth due to its niche and complex capabilities.  </li>
<li>Listed as a separate entity, PPL will see multiple expansion and command premium valuation over other Indian generic drug makers, due to its niche and limited competition portfolio.</li>
</ul>



Piramal Enterprises (PIEL IN) obtained shareholders nod for demerging its pharma business and consolidated under Piramal Pharma Limited (PPL). Later, PPL will be listed on India stock exchange.
PPL has a differentiated pharmaceutical business model, with three business verticals. CDMO, the largest revenue contributor, has track record of consistent above-market growth due to its niche and complex capabilities.  
Listed as a separate entity, PPL will see multiple expansion and command premium valuation over other Indian generic drug makers, due to its niche and limited competition portfolio.


Piramal Enterprises (PIEL IN): Demerger to Create a Differentiated and Niche Pharmaceutical Business

India

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.

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Torrent Pharmaceuticals (TRP IN)

Ajanta Pharma (AJP IN): Branded Generics Focus Ensures Consistent Growth

Strong presence in high growth Asia and Africa markets ensures healthy revenue growth in mid-term, while US business should be long-term value...

Tina Banerjee

Indian Generic Pharmaceutical Companies: The US Business Is Recovering Slowly

Indian generic pharma companies are seeing recovery in US business. Going forward, US business is expected to see accelerate revenue growth, aided...

Tina Banerjee

SENSEX Index Rebalance Preview: Adani Green Could Replace Dr. Reddy

Two-thirds of the way through the review period, Adani Green could replace Dr. Reddy in the index at the Dec rebalance. Passive trackers will need...

Brian Freitas

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

Piramal Enterprises (PIEL IN): Demerger to Create a Differentiated and Niche Pharmaceutical Business

Shareholders’ nod for the proposed demerger will create pharmaceutical-focused listed entity, which should pave the way for value unlocking due to...

Tina Banerjee

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