Syngene Int. 9 5 -14 1 9697 Monthly Update Alembic Pharma...

ICICI Securities Ltd. | Retail Equity Research

September 22, 2017

Monthly Update

Divi’s rallies on early resolution hopes…

In an unprecedented development, the USFDA has initiated post-import

alert plant inspection for Divi’s Laboratories’ Vizag API plant (unit-II) within

just six months. Note that the agency had issued import alert in the month

of March 2017 after its inspection at the fag end of 2016. Post the

inspection; the plant received an import alert from the USFDA. In a normal

course the USFDA post-import alert plant inspection takes place only after a

gap of 15-18 months as was the case with Aurobindo and Ipca. The USFDA

in its latest inspection has issued fresh six form 483 observations. But hopes

for earlier resolution of import alert as well as warning letter has lifted the

investors sentiments in the stock. The management has maintained that the

new observations are procedural in nature and the earlier five observations

have been resolved. Vizag unit II accounts for 60-65% of overall sales of

which US accounts for 30-32% of the pie. The management had earlier

indicated that the total impact of the import alert was just 3-4% of total

sales. However, the main apprehension at the time of import alert was the

threat of loosing clients from custom synthesis business.

On the regulatory front, Cadila’s Ahmedabad manufacturing facility has

received Establishment Inspection Report (EIR) from the USFDA for audit

conducted from January 16 to January 24, 2017. Biocon’s Malaysia plant

has been issued Good Manufacturing Practice (GMP) Compliance status for

its Insulin manufacturing facility by the HPRA (Ireland) as the representative

European inspection authority. .

In another development, the USFDA has give three months extension to

Biocon to take a call on application of its biosimilar drug Trastuzumab, in

order to review some additional information submitted to them as a part of

the application review process. The original target action date was

September 3, 2017.

On the domestic front, The Drug Controller General of India (DGCI) is

planning surprise checks of accredited drug and cosmetic testing

laboratories, to ensure GMP compliance. Secondly, the Government of India

is planning to open 49 cancer centres in India at an estimated cost of | 3495

crore, in 3 years.

Finally, the Indian pharmaceutical market (IPM) witnessed slight recovery in

the month of August amid GST implementation. The market) grew 2.4%

YoY to | 10317 crore in August.

After a long hiatus buying resumes in beaten down Pharma stocks

In the last few days most of the beaten down Pharma stocks have rallied

anywhere between 20 to 50%. Except in the case of Divi’s Labs, the rally is

mainly been driven by bottom fishing. Sharp surge in market liquidity as

well as rally in most of the non-pharma sectors has brought back Pharma’s

status of being defensive to some extent. However, the situation on the

earnings front remains challenging despite improvement in USFDA

approval momentum and clearance for some facilities as the headwinds of

intense competition in existing products and client consolidation in the US

remain strong. Back home the domestic growth, post GST implementation,

has shown a sign of recovery albeit slowly. Hopes are also being built on

FY20 earnings as FY18 and in some cases FY19 slowdown being more or

less in the price. We expect the earnings momentum to normalise (albeit

slowly) on the back of incremental product launches largely on speciality

front in the US besides normalising of Indian formulations growth and

recovery in emerging markets.

Health Check

Health Check

Stocks Performance

Mcap

Company 1M 3M YTD 1Y 21-Sep

Sun Pharma.Inds. 13 -1 -17 -33 124989

Cadila Health. 6 -4 40 28 51182

Cipla 5 9 4 -2 47521

Lupin 12 -5 -30 -33 46795

Aurobindo Pharma 9 15 13 -6 44296

Dr Reddy's Labs 27 -9 -20 -22 40598

Divi's Lab. 58 52 25 -26 26042

Torrent Pharma. 5 10 0 -19 22244

Biocon 11 8 15 16 21852

Glaxosmit Pharma 1 -3 -12 -14 20360

Glenmark Pharma. 7 1 -29 -30 17916

Apollo Hospitals 2 -16 -10 -19 14853

Natco Pharma 12 -17 39 27 14087

Jubilant Life -1 -1 9 10 11023

Ajanta Pharma 8 -19 -30 -37 10940

Syngene Int. 9 5 -14 1 9697

Alembic Pharma -5 -8 -17 -25 9284

Strides Arcolab 9 5 -7 -4 8840

Pfizer -1 -1 -3 -11 8076

Wockhardt 22 13 0 -26 7257

Ipca Labs. 23 7 -5 -15 6361

Unichem Labs. 1 -6 -3 -6 2255

Indoco Remedies 6 11 -21 -38 1905

Return (%)

Market cap in | crore

Global Indices Performance

Company 1M 3M YTD 1Y 3Y 5Y

S&P 500 Pharm Index (US) 5 1 13 8 7 14

NASDAQ Biotechnology (US) 9 5 26 12 7 19

S&P Pharmaceuticals (US) 5 -2 9 -8 -4 10

DJ Pharma and Biotech (US) 8 6 21 13 8 16

DJ STOXX Healthcare (EU) 4 -5 8 4 5 12

TOPIX Pharma Index (Japan) 4 1 5 9 11 17

MSCI World Pharm & Biotech 6 3 19 11 4 13

BI Global Spectalty-Generic Pharm 2 -13 -18 -36 -18 1

NSE Pharma 13 2 -6 -18 -3 12

Return (%)

Research Analyst

Siddhant Khandekar

[email protected]

Mitesh Shah

[email protected]

Harshal Mehta

[email protected]


IPM grew 2.4% YoY in August

The Indian pharmaceutical market (IPM) growth increased 2.4% YoY to

| 10317 crore for August. IPM growth was due to increase in volumes –

1% and new product launches – 2.9%. While price declined by 1.6% in

August

The fixed dosage combination (FDCs) related market de-grew 4.2%,

while the Non FDC market registered a growth of 2.5%

Drugs under NLEM list declined 3.8% to | 1094 crore while non-NLEM

drugs 3.1% to | 8799 crore. Volume grew marginally in NLEM and non-

NLEM at 0.2% and 0.6%, respectively

Among companies under I-direct coverage Cadila, Biocon, Lupin,

Torrent, Ajanta, Sun, Torrent Pharma and Glenmark have registered

higher than industry growth rate

Therapy wise, 15 therapies have shown growth for the month of

August. Notable among them were Anti-Diabetic – 10.6% YoY, Cardiac

– 8.1% and Derma – 12.7%. On the other hand, anti-Infectives declined

8% YoY, Respiratory declined 6.1% and Anti-malaria decline 30.4%.

On a MAT basis, IPM growth was at 8.6% YoY to | 113919 crore

Domestic companies have grown 1.4% YoY while MNC companies

have grown 6.2% in August 2017

Exhibit 1: Domestic formulations - growth trend

[

17.6

13.7

8.9

14.5

6.9 9

.1

6.2

9.6

Apr-17

7.2

5.2

-2.4

2.4

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Aug-16

Sep-1

6

Oct-16

Nov-16

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

(%

)

Source: AIOCD data base, ICICIdirect.com Research

Exhibit 2: Companies growth in domestic market in August, 2017

7.2

-8.3

6.4

16.0

-2.4-0.7

5.5

8.6

-10.7

-19.8

8.9

-15.5

8.7

-3.1

4.05.7

-2.6

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Ajanta

Ale

mbic

Bio

con

Cadila

Cip

la

DR

L

Gle

nm

ark

GS

K P

harm

a

Indoco

Ipca Labs

Lupin

Natco

Novartis

Pfiz

er

Sun P

harm

a

Torrent

Unic

hem

(%

)


Therapy wise performance (| crore)

Therapy Aug' 17 Aug' 16 YoY (%) July' 17 MoM (%)

Anti-Infectives 1540 1674 -8.0 1264 21.9

Cardiac 1235 1142 8.1 1161 6.3

GI 1200 1171 2.5 1148 4.6

Anti Diabetic 910 823 10.6 873 4.2

Vitamins 907 891 1.8 847 7.1

Respiratory 747 796 -6.1 596 25.3

Pain 716 715 0.1 636 12.5

Derma 655 581 12.7 584 12.1

Neuro 609 577 5.6 558 9.0

Gynaecological 519 492 5.4 491 5.7

Anti-Neoplastics 214 199 7.6 182 17.9

Vaccines 188 175 7.2 179 4.7

Ophthal 185 174 6.0 172 7.2

Hormones 176 161 9.1 155 13.6

Blood Related 123 112 9.8 123 0.4

Urology 122 113 7.9 114 7.4

Others 110 99 10.9 97 14.0

Sex Stimulants 50 47 7.7 44 15.2

Anti Malarials 62 90 -30.4 44 40.5

Stomatologicals 49 45 9.1 45 8.8

Source: AIOCD data base

Top brands in Indian pharma market (MAT; | crore)

Brand Company Therapy Aug' 17 YoY (%)

Mixtard Abbott Anti Diabetic 510.0 6.3

Spasmo Proxyvon PlusWOCKHARDTGI 435.0 36.1

Glycomet Gp Usv Anti Diabetic 432.0 22.0

Galvus Met Novartis Anti Diabetic 377.0 27.6

Lantus Sanofi India Anti Diabetic 353.0 28.5

Janumet MSD Anti Diabetic 326.0 27.1

Augmentin GSK GI 308.0 4.2

Liv 52 Himalaya Anti-Infectives 302.0 9.2

Novomix Abbott Anti-Infectives 282.0 38.3

Clavam Alkem Anti-Infectives 275.0 2.4

Source: AIOCD data base

Industry Acute vs Chronic vs Sub Chronic

Acute

48%

Chronic

32%

Sub

Chronic

20%

Source: AIOCD data base; As per AIOCD MAT July 2017


Domestic Formulations – I-Direct Coverage universe data summary

Exhibit 3: Domestic formulations – Market Share (MAT Value August-17)

[

8.5%

4.6% 4.4%

3.3%

2.4% 2.3% 2.2%

1.4% 1%0.8% 0.8% 0.7% 0.6%

0.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Sun

Cip

la

Cadila

Lupin

Gle

nm

ark

Torrent

Dr. R

eddys

IPCA

Ale

mbic

Natco

Cadila

Indoco

Ajanta

Bio

con

Market Share

Market Share


Exhibit 4: Acute vs Chronic vs Sub Chronic (MAT Value August-17)

39

56

19

4452

42

81

65

31

88

39

2233

51

5124

74

43 28

35

628

51

0

47

53

6131

1020

7 1320 23

137

1812 14

25

618

0

20

40

60

80

100

120

Aja

nta

Ale

mbic

Bio

con

Cip

la

Dr. R

eddys

Gle

nm

ark

Indoco

IPC

A

Lupin

Natco

Sun

Torrent

Unic

hem

Cadila

%

Acute Chronic Sub Chronic



Exhibit 5: Top five brands in Value terms (MAT Value August-17)

[5

Sun Brand Therapy Sales (|cr)

1 Volini Pain 237

2 Istamet Anti Diabetic 224

3 Rosuvas Cardiac 219

4 Gemer Anti Diabetic 201

5 Levipil Neuro 184

Cipla Brand Therapy Sales (|cr)

1 Foracort Respiratory 234

2 Duolin Respiratory 183

3 Seroflo Respiratory 152

4 Asthalin Respiratory 141

5 Budecort Respiratory 139

Cadila Brand Therapy Sales (|cr)

1 Skinlite Derma 191

2 Deriphyllin Respiratory 117

3 Mifegest Kit Gynaecological 117

4 Pantodac GI 113

5 Atorva Cardiac 107

Lupin Brand Therapy Sales (|cr)

1 Gluconorm-G Anti Diabetic 192

2 Budamate Respiratory 105

3 Tonact Cardiac 92

4 Supradyn Vitamins 66

5 Falcigo Anti Malarials 55

Torrent Brand Therapy Sales (|cr)

1 Shelcal Vitamins 185

2 Storvas Cardiac 110

3 Nikoran Cardiac 97

4 Digene GI 88

5 Nebicard Cardiac 80

Dr. Reddys Brand Therapy Sales (|cr)

1 Omez GI 112

2 Omez D GI 104

3 Prega News Others 69

4 Econorm GI 69

5 Razo D GI 64

Glenmark Brand Therapy Sales (|cr)

1 Telma Cardiac 175

2 Telma H Cardiac 170

3 Ascoril Plus Respiratory 117

4 Candid Derma 110

5 Candid-B Derma 95

IPCA Brand Therapy Sales (|cr)

1 Zerodol Sp Pain 122

2 Zerodol P Pain 94

3 Hcqs Anti Malarials 85

4 Larinate Anti Malarials 58

5 Glycinorm M Anti Diabetic 48

Alembic Brand Therapy Sales (|cr)

1 Azithral Anti-Infectives 145

2 Roseday Cardiac 75

3 Ascoril Ls Respiratory 57

4 Ensure Vitamins 56

5 Feronia Xt Gynaecological 49

Unichem Brand Therapy Sales (|cr)

1 Montair Lc Respiratory 102

2 Montaz Anti-Infectives 74

3 Ampoxin Anti-Infectives 69

4 Unienzyme GI 62

5 Librax GI 33

Natco Brand Therapy Sales (|cr)

1 Hepcinat Anti-Infectives 203

2 Geftinat Anti-Neoplastics 145

3 Corex Respiratory 100

4 Erlonat Anti-Neoplastics 95

5 Dytor Cardiac 87

Indoco Brand Therapy Sales (|cr)

1 Febrex Plus Respiratory 80

2 Cyclopam GI 47

3 Histac GI 45

4 Sensodent-K Stomatologicals 38

5 Budesal Respiratory 35

Ajanta Brand Therapy Sales (|cr)

1 Met Xl Cardiac 83

2 Atorfit Cv Cardiac 51

3 Amlong Cardiac 48

4 Cifran Ct GI 23

5 Trapic Mf Blood Related 22

Biocon Brand Therapy Sales (|cr)

1 Insugen Anti Diabetic 103

2 Basalog Anti Diabetic 73

3 Viagra Sex Stimulants 33

4 Esgipyrin Pain 30

5 Gemcal Plus Vitamins 22

Source: Bloomberg, ICICIdirect.com Research


Exhibit 6: Top five Therapies in Value term (MAT Value August-17)

[5

Sun Therapy Sales (|cr)

1 Anti-Infectives 972

2 Cardiac 1851

3 GI 1137

4 Anti Diabetic 931

5 Vitamins 383

Cipla Therapy Sales (|cr)


2 Cardiac 658

3 GI 396

4 Anti Diabetic 88

5 Vitamins 75

Cadila Therapy Sales (|cr)


2 Cardiac 693

3 GI 559

4 Anti Diabetic 84

5 Vitamins 214

Lupin Therapy Sales (|cr)


2 Cardiac 930

3 GI 311

4 Anti Diabetic 558

5 Vitamins 183

Torrent Therapy Sales (|cr)


2 Cardiac 774

3 GI 410

4 Anti Diabetic 199

5 Vitamins 370

Dr. Reddys Therapy Sales (|cr)


2 Cardiac 351

3 GI 535

4 Anti Diabetic 174

5 Vitamins 74

Glenmark Therapy Sales (|cr)


2 Cardiac 614

3 GI 98

4 Anti Diabetic 173

5 Vitamins 55

IPCA Therapy Sales (|cr)


2 Cardiac 270

3 GI 122

4 Anti Diabetic 85

5 Vitamins 38

Alembic Therapy Sales (|cr)


2 Cardiac 220

3 GI 186

4 Anti Diabetic 111

5 Vitamins 115

Unichem Therapy Sales (|cr)


2 Cardiac 424

3 GI 113

4 Anti Diabetic 58

5 Vitamins 23

Natco Therapy Sales (|cr)


2 Cardiac 1

3 GI 0

4 Anti Diabetic 0

5 Respiratory 0

Indoco Therapy Sales (|cr)


2 Cardiac 10

3 GI 108

4 Anti Diabetic 30

5 Vitamins 58

Ajanta Therapy Sales (|cr)


2 Cardiac 274

3 GI 14

4 Anti Diabetic 15

5 Vitamins 30

Biocon Therapy Sales (|cr)


2 Cardiac 16

3 GI 3

4 Anti Diabetic 237

5 Vitamins 1



Exhibit 7: Summary of USFDA approvals for August, 2017

[5

Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size

Cadila Healthcare Memantine Hydrochloride CNS Forest Labs Namenda US$ 1 billion

Cipla Nevirapine Anti-Retroviral Boehringer Ingelheim Viramune NA

Jubilant Lifesciences Tizanidine Hydrochloride Pain Management Acorda Zanaflex NA

Sun Pharma Albuterol Sulfate And Ipratropium Bromide Respiratory Boehringer Ingelheim Combivent NA

Cadila Healthcare Diltiazem Hydrochloride Anti-Hypertension Valeant International Cardizem Cd NA

NATCO PHARMA Lanthanum Carbonate GI Shire Llc Fosrenol US$ 122 million

Cadila Healthcare Azelastine Hydrochloride Respiratory Medpointe Pharm Hlc Astelin NA

Cadila Healthcare Hydrochlorothiazide; Telmisartan Hypertension Boehringer Ingelheim Micardis Plus NA

Cadila Healthcare Pindolol Hypertension Novartis Visken US$ $84 million

Glenmark Pharma Triamcinolone Acetonide Dermatology Mylan Triamcinolone Acetonide CreamUS$ 4.4 million

Cadila Healthcare Ziprasidone Hydrochloride Capsules Anti-Psychotic Pfizer Geodon NA

Cadila Healthcare Candesartan Cilexetil Anti-Hypertension Astrazeneca Atacand NA

Jubilant Lifesciences Indomethacin Anti-Inflammatory Iroko Pharma Tivorbex NA

Aurobindo Pharma Ezetimibe Obesity Merck Zetia US$2.7 billion

Ajanta Pharma Eletriptan Hydrobromide Pain Management Pfizer Relpax NA

Cadila Healthcare Aspirin; Dipyridamole CVS Boehringer Ingelheim Aggrenox NA

Cadila Healthcare Donepezil Hci CNS Eisai Inc. Aricept US$ 52 million

Cadila Healthcare Mycophenolate Mofetil Tablets Immuno Suppressant Roche Cellcept NA

Ajanta Pharma Entacapone CNS Orion Pharma Comtan NA

Company Drug Name Therapeutic Area Innovator company Generic Version of Market Size

Sun Pharma Adapalene; Benzoyl Peroxide Anti-Bacterial Galderma Labs Epiduo NA

Cadila Healthcare Abacavir;Lamivudine Tablets HIV Viiv Healthcare Epzicom NA

Cadila Healthcare Mesalamine Suppositories GI NA NA NA

Alembic Pharma Asenapine CNS Forest Labs Saphris NA

Ajanta Pharma Solifenacin Succinate Urology Astellas Pharma Vesicare US$ 1.1 billion

Aurobindo Pharma Dolutegravir; Lamivudine; Tenofovir Disoproxil Fumarate HIV NA NA NA

Cipla Arformoterol Tartrate Respiratory Sunovion PharmaceuticalsBrovana NA

Tentative Approvals


Exhibit 8: US Patent litigations [5

Month Innovator ANDA Filer Brand Name API Used for

Apr-17 BMS ; Pfizer Aurobindo ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Lupin ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Torrent Pharma ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Unichem ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Dr. Reddy's Lab ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Indoco Remedies ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Sun Pharma ELIQUIS apixaban Anticoagulant

Apr-17 BMS ; Pfizer Cadila Healthcare ELIQUIS apixaban Anticoagulant

Apr-17 Celgene Corp Cadila Healthcare REVLIMID lenalidomide Oncology

Apr-17 Elli Lilly Dr. Reddy's Lab CIALIS tadalafil erectile dysfunction

Apr-17 Millenium Pharma Cadila Healthcare REVLIMID lenalidomide Oncology

Apr-17 Bayer Pharma Taro Pharma Xarelto Rivaroxaban Blood Thinner

Apr-17 Bayer Pharma Aurobindo Pharma Xarelto Rivaroxaban Blood Thinner

May-17 Takeda Pharma Torrent Pharma Nesina Alogliptin Diabetes

May-17 Takeda Pharma Glenmark Qudexy XR Topiramate Epilepsy

Jun-17 Allergan Taro Pharma Aczone Dapsone Leprosy

Jun-17 Genentech Sun Pharma Tarceva Erlotinib Cancer

Jun-17 Bayer AG Alembic Pharma Xarelto Rivaroxaban Blood Thinner

Jun-17 Teva Dr Reddy's Lab Copaxone Glatiramer Multiple Sclerosis

Jun-17 Valeant Pharma Sun Pharma Uceris Budesonide Ulcerative Colitis

Jun-17 Omeros Corp Lupin Omidria Phenylephrine And Ketorolac Pupil Dilation

Jun-17 Amgen Lupin Sensipar Cinacalcet Calcium Reducer

Jun-17 Biogen Aurobindo Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Sun Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Cipla Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Glenmark Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Lupin Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Forest Laboratories Sun Pharma Linzess Linaclotide Irritable Bowel Syndrome

Jun-17 Biogen Torrent Pharma Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jun-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jul-17 Janssen Pharma Aurobindo Pharma Invokana Canagliflozin Diabetes

Jul-17 Actelion Pharma Sun Pharma Veletri Epoprostenol Pulmonary Arterial Hypertension

Jul-17 Biogen Cadila healthcare Tecfidera Dimethyl Fumarate Multiple Sclerosis

Jul-17 Delcor Asset Corp Sun Pharma Evoclin Clindamycin Acne vulgaris

Jul-17 Celgene Corp Dr Reddy's Lab Revlimid Lenalidomide Oncology

Jul-17 PreCision Dermatology Lupin Locoid Hydrocortisone butyrate Dermatitis

Jul-17 BMS Cadila healthcare Reyataz Atazanavir HIV

Jul-17 Endo Pharma Lupin Nascobal Cyanocobalamin Vitamin B12 deficiency

Jul-17 Bayer Sun Pharma Aczone Clindamycin Acne vulgaris

Aug-17 Bayer AG Lupin Xarelto Rivaroxaban Blood Thinner

Aug-17 Horizon Therapeutics Lupin Ravicti Glycerol Phenylbutyrate Inborn Urea Cycle Disorder

Aug-17 Celgene Cipla Revlimid Lenalidomide Oncology

Aug-17 Kissei Pharmaceuticals Aurobindo Rapaflo Silodosin Enlarged Prostate

Aug-17 Bayer AG Torrent Pharma Xarelto Rivaroxaban Blood Thinner

Aug-17 Forest Laboratories Aurobindo Linzess Linaclotide Irritable Bowel Syndrome

Aug-17 Alcon Research Cipla Pazeo Olopatadine Ocular Itching

Aug-17 Sanofi-Aventis Aurobindo Multaq Dronedarone Atrial Fibrillation

Aug-17 Janssen Products LP Aurobindo Prezista Darunavir Hiv

Aug-17 Allergan Aurobindo Lastacaft Alcaftadine Allergic Conjunctivitis



Monthly Sector News

M&As, Demergers, Tie-ups and JVs

Alembic sells Baddi facility

Alembic Pharma has sold its formulations manufacturing facility at Baddi

(H.P.) to Scott Edil Pharmacia Limited. As per the management, revenue

contribution and net-worth of this manufacturing facility was insignificant in

FY17

Jubilant Life completes Triad acquisition

Jubilant life has completed acquisition of radio pharmacy business Triad

Isotopes (US). The acquisition was funded through company’s internal

accruals

Cadila Healthcare ties up with Pharm-Aid in Russia

Cadila Healthcare has tied up with Pharm-Aid to get the technology of

chicken pox vaccine and gain access to the public and private market

segments in the Russian Federation, Belarus, Uzbekistan, Kazakhstan,

Armenia and Kyrgyzstan

Price hikes, new launches, recalls, approvals

Cadila Healthcare faces increasing competition in Lialda

As per media sources, Shire Plc has launched its Authorised Generic (AG)

version of Lialda (GI). Cadila had launched this drug in US markets in July,

2017 and hence, increased competition is expected for the drug.

Lawsuits, court rulings, settlements, regulatory issues

Indian Law ministry cites legal limitations in curbing unethical drug practises

As per media sources, Government of India’s plan to curb unethical

practises in country’s drug industry faces indefinite delay after it has been

rejected by the law ministry citing limitations of current legal framework in

the current format

Sun Pharma Halol plant clears MHRA inspection

As per media sources, Sun pharma's Halol plant has received clearance

from the UK’s pharma regulatory body (MHRA)

Glenmark’s Indore facility clears USFDA inspection

As per media sources, Glenmark's Indore plant has received zero form 483

observations from the USFDA, in response to USFDA inspection at the plant

which lasted for a week. Glenmark manufactures oral solids at its Indore

facility for US market

Biocon receives USFDA extension on a biosimilar application

Biocon has been given three months extension by the USFDA to take a

decision on the application of its biosimilar drug Trastuzumab, in order to

review some additional information submitted to them as a part of the

application review process. The original target action date was September

3, 2017

Cadila’s Ahmedabad facility receives USFDA clearance

Cadila’s Ahmedabad manufacturing facility has received EIR from the

USFDA for audit conducted from January 16, 2017 to January 24, 2017

Biocon’s Mayasia plant receives cGMP compliance from HPRA

Biocon’s Malaysia plant has been issued a GMP Compliance for its Insulins

manufacturing facility by the HPRA (Ireland) as the representative European

inspection authority. Biocon's Malaysia facility was inspected by the EMA in

April 2017


Cadila’s Moriaya plant clears USFDA inspection

Cadila’s Moraiya plant has been issued zero form 483 observations by the

USFDA, as a response to its inspection carried out from 31st August 2017 to

7th September, 2017

Dr Reddy’s plant receives observations from the Germany authority

Dr Reddy’s has received six observations at its Duuvada formulations facility

(Oncology) by the regulatory authority of Germany. The company has

described the observations as major but not critical. The plant is not

currently exporting any product to the EU

Aurobindo receives VAI status for Unit IV and 2 observations for Unit VI

Aurobindo Pharma has received Voluntary Action Indicated (VAI) status

from USFDA for its Unit IV plant, in response to the seven observations

received for the plant during USFDA April 20-28th inspection. USFDA has

also issued two observations to Unit VI plant during its inspection from

August 28- Sept 1, 2017. The regulator found no written procedures for

production and process controls

Dr Reddy’s UK plant receives USFDA observations

Dr Reddy's Mirfield plant (API facility) in UK has received 3 form 483

observations from the USFDA. The management has not disclosed the

nature of the observations

USFDA completes inspection of Divi’s Lab Unit 2

Divi’s Lab unit 2 has received six form 483 observations from the USFDA.

As per the management, the inspection was for cGMP and verification of

corrective actions against previous five observations raised by the USFDA.

The management has also clarified that the six new observations are

procedural in nature

Others

Dr Reddy’s out-licenses its Derma candidate to Encore Dermatology

Dr Reddy’s wholly owned subsidiary, Promius Pharma, has out-licensed the

future development, manufacturing, and commercialisation rights of DFD-06

(Dermatology), to Encore Dermatology. Promius Pharma is eligible to

receive certain pre- and post-commercialisation milestone payments of up

to US$ 32.5 million, followed by fixed royalty payments on net sales

Lupin’s drugs list on Japanese National Health Insurance

Lupin’s Japanese subsidiary has announced listing of NHI (National Health

Insurance) drug price for its generic drug Quetiapine fumarate ER tablet

(CNS). NHI drug price: 71.00 Yen (| 41.1) per 50mg tablet, 188.60 Yen (|

109.2) per 150mg tablet

DGCI plans surprise quality checks

The Drug Controller General of India (DGCI) is planning surprise checks of

accredited drug and cosmetic testing laboratories, to ensure GMP

compliance. A central team will jointly inspect these facilities along with the

state machinery

Biocon receives funding for its oral insulin candidate study

Biocon will get funding from Juvenile Diabetes Research Centre (JDRF) for

its global study of oral Insulin drug candidate to evaluate the safety and

tolerability in people with type 1 diabetes

Government of India to set up cancer centres across the country

Government of India is planning to open 49 cancer centres (in addition of

already operational 31 centres) in India at an estimated cost of 3495 crore,


in 3 years. The 49 cancer centres will be initially set up under two categories

— state cancer institutes and tertiary care cancer centres (TCCCs) in a

phased manner — they will be responsible for building capacities of other

institutions below for prevention, control, diagnosis and treatment.

Exhibit 9: One year forward P/E of NSE Pharma vs. Nifty

[

0.0

10.0

20.0

30.0

40.0

50.0

9/21/2011

3/21/2012

9/21/2012

3/21/2013

9/21/2013

3/21/2014

9/21/2014

3/21/2015

9/21/2015

3/21/2016

9/21/2016

3/21/2017

9/21/2017

x

NSE Pharma Nifty

26% Premium


ICICIdirect.com coverage universe (Healthcare)

Company I-Direct CMP TP Rating M Cap

Code (|) (|) (| Cr) FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E

Ajanta Pharma AJAPHA 1243 1,420 Buy 10939.8 110.0 56.6 57.1 71.0 11.3 22.0 21.8 17.5 46.2 41.8 33.1 32.4 37.3 33.2 26.5 26.0

Alembic Pharma ALEMPHA 492 570 Hold 9275.0 38.2 21.2 19.1 28.6 12.9 23.2 25.7 17.2 52.2 25.3 18.7 23.9 45.1 21.0 16.5 20.8

Apollo Hospitals APOHOS 1066 1,180 Hold 14832.1 13.2 15.9 7.6 19.7 80.8 67.1 140.5 54.1 6.6 6.0 6.0 8.9 5.3 6.0 2.8 6.8

Aurobindo Pharma AURPHA 756 745 Hold 44292.7 33.9 38.8 46.8 41.4 22.3 19.5 16.2 18.3 23.1 24.4 25.5 19.6 27.2 24.2 22.9 17.1

Biocon BIOCON 364 380 Hold 21840.0 7.7 11.0 7.8 13.5 47.2 33.2 46.8 27.0 9.3 11.9 10.1 15.9 11.5 13.6 9.0 13.9

Cadila Healthcare CADHEA 500 440 Hold 51212.7 15.0 14.5 19.3 22.0 33.5 34.4 25.9 22.8 24.9 13.1 17.2 19.2 34.4 21.4 23.4 22.2

Cipla CIPLA 592 525 Hold 47641.4 18.5 12.5 21.3 26.2 32.0 47.2 27.8 22.6 11.8 7.7 12.5 14.2 12.9 8.0 12.3 13.5

Divi's Lab DIVLAB 979 665 Hold 26001.3 41.5 39.3 34.6 41.5 23.6 24.9 28.3 23.6 31.0 25.0 20.3 21.4 25.7 19.5 15.4 16.3

Dr Reddy's Labs DRREDD 2466 2,400 Hold 40884.3 141.4 70.6 72.4 126.2 17.4 34.9 34.1 19.5 15.3 6.1 6.8 11.9 19.2 9.5 9.0 13.9

Glenmark Pharma GLEPHA 635 730 Hold 17914.9 32.2 46.0 38.7 40.6 19.7 13.8 16.4 15.6 16.2 18.9 15.9 15.5 21.2 25.5 17.9 15.9

Indoco Remedies INDREM 205 180 Hold 1889.1 9.4 8.4 4.9 12.1 21.8 24.5 42.1 16.9 12.9 8.4 5.5 12.0 14.8 12.0 6.6 14.5

Ipca Laboratories IPCLAB 509 410 Hold 6416.5 7.4 15.4 12.6 25.5 68.9 33.0 40.3 19.9 4.5 8.7 6.8 12.4 4.1 7.9 6.2 11.3

Jubilant Life JUBLIF 692 845 Buy 11023.8 26.0 36.1 44.3 59.1 26.6 19.2 15.6 11.7 12.0 13.3 14.8 17.6 14.2 16.8 17.3 19.0

Lupin LUPIN 1035 1,070 Hold 46756.5 50.4 56.6 41.4 53.4 20.5 18.3 25.0 19.4 17.8 16.6 12.4 15.5 20.3 18.9 12.4 14.2

Natco Pharma NATPHA 809 955 Hold 14103.2 9.0 27.0 26.6 16.0 89.5 30.0 30.5 50.5 16.0 33.0 28.3 16.1 12.2 28.8 23.3 12.7

Sun Pharma SUNPHA 522 445 Hold 125240.7 23.4 29.0 14.8 20.3 22.3 18.0 35.2 25.7 18.6 19.8 9.8 12.4 18.0 19.0 9.2 11.4

Syngene Int. SYNINT 484 490 Hold 9680.0 11.1 14.3 14.3 17.4 43.6 33.6 33.6 27.7 14.1 16.8 16.2 17.8 21.6 20.3 17.2 17.4

Torrent Pharma TORPHA 1316 1,250 Hold 22276.5 110.9 55.2 48.3 65.8 11.9 23.9 27.2 20.0 46.5 18.9 17.6 20.7 53.7 21.5 16.5 19.2

Unichem Lab UNILAB 249 235 Hold 2259.3 12.3 12.0 12.2 19.4 20.2 20.7 20.4 12.8 13.8 11.8 10.7 15.7 11.7 10.2 9.5 13.5

RoE (%)EPS (|) PE(x) RoCE (%)

Source: Company, ICICIdirect.com Research

http://m.timesofindia.com/topic/state-cancer-institutes

http://m.timesofindia.com/topic/tertiary-care-cancer-centres


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ratings to its stocks according to their notional target price vs. current market price and then categorises them

as Strong Buy, Buy, Add, Reduce and Sell. The performance horizon is two years unless specified and the

notional target price is defined as the analysts' valuation for a stock.

Sector view:

Over weight compared to index

Equal weight compared to index

Under weight compared to index

Index here refers to BSE 500

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