The brokerage indicates that overall sales will rise 10.3% YoY to ₹69,300 crore, helped by robust demand for US generics and strong results in the domestic formulation (DF) market.
EBITDA (earnings before interest, taxes, depreciation and amortization) is forecast to increase by 15.2% YoY to ₹15,900 crore, driven by low operating costs (lower freight/staff costs) and higher percentage of niche launches in US generics.
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However, profit after tax (PAT) is expected to increase at a faster rate of 19.7% YoY to ₹9,700 crore due to lower tax and depreciation. Hospital profitability is expected to increase, according to the brokerage, as improved realization and operating leverage should result from better case mix/payer mix optimization.
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DF: YoY growth steady at high single digits
The brokerage expects the companies’ combined DF segment sales to grow 8.7% YoY to ₹18,400 crore in 3QFY24. This growth will be driven primarily by the companies’ strong performance in anti-infective, gastro and pain therapies, which outperformed IPM during the quarter.
It is, however, likely to be somewhat countered by a moderate increase in antidiabetic and dermatological therapies. To increase sales growth and profitability, companies are focusing on launching niche products and increasing the productivity of medical representatives (MRs).
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The brokerage projects that Torrent Pharma and Alkem Lab will achieve 16% and 12% YoY sales growth in the large cap, respectively, thanks to new launches, emphasis on OTC business, improved MR productivity and robust growth in their respective key therapies. .
“We expect Sun Pharma/Lupin to report 8% YoY growth each in DF revenue, led by steady traction in existing therapies and increase in MR productivity. We estimate Eris Lifesciences/Ajanta Pharma to deliver 15%/12% YoY growth in DF. sales, due to strong growth in respective portfolios and new launches,” the brokerage said.
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USA: Partial slowdown in YoY growth trend
For the quarter, the brokerage projects 8.3% YoY growth in US sales to USD 2.2 billion. This growth, however, is less than the 15.8% YoY average growth over the previous four quarters. The YoY growth trend in US generics is expected to strengthen due to decreasing pricing pressure and the growing popularity of products with limited competition, such as g-Revlimid and Spiriva.
Aurobindo Pharma, Lupine and Cipla in particular are expected to generate YoY growth of 19%, 16% and 15% during the quarter. Niche launches (new launches for Aurobindo Pharma, g-Spiriva for Lupin, and gRevlimid for Cipla) will drive growth in these companies. The specialty portfolio is expected to drive 9% YoY growth in Sun Pharmaceutical’s US sales. Although Torrent Pharma has met all compliance requirements at the Dahej facility, the product has not yet received approval.
“Therefore, we expect moderate growth of 5.6% YoY in Torrent Pharma’s US sales during the quarter. For Glenmark Pharma/Alkem Lab, US sales are expected to decline 7%/3% YoY. In 3QFY24, our coverage companies received 53 ANDA- approvals (final) compared to 51 in 2QFY24,” the brokerage said.
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Disclaimer: The above views and recommendations are those of individual analysts, experts and trading companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 10 Jan 2024, 13:52 IST
(tagsTo Translate)Q3 results Preview