Pharma companies look to be in better shape in March quarter

A favourable currency movement, opportunities for exclusive drug launch in the US and a marginal recovery in the domestic pharma market (on a sequential basis) will ensure an improved performance by local pharma firms in the quarter to March.


Among local drugmakers, Sun Pharma, Lupin and Cipla may outperform their peers. In the US, most Indian pharma companies are looking at increasing their product portfolio by filing for niche limited-competition products. Sun Pharma’s US business is going to benefit from drug shortages and the consolidation of its latest acquisitions – DUSA and URL Pharma. Lupin is expected to do well on the back of its product launches in the US and its strong performance in Japan.

Companies such as Ranbaxy, Dr Reddy’s Labs ( DRL) and Cadila Healthcare are likely to report a subdued performance in the March quarter. Ranbaxy’s top line is going to be impacted due to the recall of atorvastatin and delayed launches of its products having exclusive opportunities.

A high base effect will work against DRL, although the company is expected to perform better in the domestic and the Russian market. Cadila Healthcare is also likely to continue its lacklustre performance on account of a slowdown in its US business. Contract manufacturing firm Divi’s Labs is expected to post a strong operational performance.

Among mid-tier pharma companies, Aurobindo Pharma is expected to improve its performance in the quarter to March on the back of more product launches in the US. MNCs, with the exception of GSK Pharma and Sanofi, are expected to report a lacklustre performance due to the slower growth in the anti-infectives segment in the domestic market.

Growth in the domestic pharma sector, which has recovered marginally from the December quarter, still remains disappointing – impacting the prospects of the domestic formulations business of most drug firms.

With operations outside India increasingly generating higher income, the tax rates for most pharma companies have climbed up – impacting their profitability. A sustained recovery in the domestic market, faster approvals of products in the US and increased exclusivity launches will be key triggers for Indian pharma companies in the quarters ahead.

kiran.somvanshi@ timesgroup.com