- The past 2 quarters have not been very kind to the Pharma Industry. After a post pandemic rally, the industry has been facing headwinds in FY22. The major pain points across all companies are a steep rise in prices of raw materials, energy and shipping. This has led to contraction in margins for a majority of players in the industry. Inventory normalization by customers and dealers has been a major factor affecting the demand side of the business.
- Most Indian pharma companies fall into one of these buckets
- The competitive forces that determine pricing power in each of these segments are different. But the pain of rising input and logistics costs was felt across the board.
Commodity Generics
- Increase in competition in the US markets has led to severe price erosion for most companies putting pressure on margins. The margins for these companies have declined on a YoY basis. Revenues from the COVID portfolio have been on the decline as well. They expect a recovery of demand in Q4 due to the third wave. Raw material, logistics and energy costs are expected to normalize from Q1 FY23.
- Most of the companies in this space have been moving towards branded generics in emerging markets and focusing more on the domestic business. Aurobindo Pharma will enter the branded generics market in India through an acquisition and plan to do ₹1000 Cr in sales in the first year. They believe the domestic market has seen a lot of changes and they do not need fewer market reps to cover the whole country. For the US, most large pharma companies have started receiving approvals for complex generics and are in the process of filing BLAs for Biosimilars.
- Cipla received approval for Lanreotide injection – which is used to stop the release of growth hormone in the body. Cadila received 180 days exclusivity under Para IV to market Nelarabine injection which is used to treat leukemia. Alembic Pharma stated in their earnings call that they will be focusing on Para IV opportunities in the oncology space as well. Cadila also entered into a manufacturing license and technology transfer agreement for ZyCov-D (their in-house developed COVID vaccine) with Enzychem Lifesciences of South Korea. This will lead to manufacturing of over 80 million doses of the vaccine in 2022. These doses will be supplied in South Korea and a number of countries in Latin America and Asia.
- Dr Reddy’s received approval for Molnupiravir in India and they are also ready with capacities to manufacture the Sputnik vaccine whereas Strides is in the final testing phases and will start invoicing within the month for Sputnik.
Branded Generics
- Performance of the companies in the domestic formulations business has been a mixed bag. While the companies operating in India’s branded generics market did not face headwinds such as price erosion and container unavailability for export, the sharp rise in API prices from China were a major issue. This has been very evident in the case of J B Chemicals and Pharmaceuticals, their margins have seen a very steep decline in the past 2 quarters due to increase in API prices. All the companies in this space will be taking approximately 10% price increase across the NLEM portfolio.
- J B Chemicals and Pharma acquired Sanzyme – a major player in the probiotics segment this quarter, which caused them to jump 2 ranks in the IQVIA rankings. They are expecting significant synergies as Sanzyme has a negligible presence in geographies like Bihar and West Bengal where J B Chemicals is a very strong player.
- Indoco Remedies’ margins have improved as Goa Plant 2 has been cleared this year. They will be adding a suspension line here which will increase capacity by about 33%. Neither the domestic or export business has been on track for them and they will be falling short of the full year guidance. They had to suspend exports to Europe temporarily as prices of Paracetamol skyrocketed. They have a strong order book for Europe and also expect normalization of raw material prices in the coming quarters.
- Eris Lifesciences has entered into the insulin analogues and GLP1 markets through a joint venture with MJ Biopharm in which Eris holds a 70% equity stake. They are on track to launch human insulin next month. They are creating a new division with 140 medical representatives to kick start the insulin business. The next big product from this joint venture would be Glargine which is presently in Phase 3 clinical trials and is expected to launch sometime in calendar year 2023.
- While margins have been under pressure as they cannot pass on raw material price increases, the recovery is expected to be strong. MR productivity has been increasing across the board and FY23 could very well be a very strong year for the domestic pharma business
Bulk Drugs / APIs
- The API players have been the worst hit. The companies are dependent on raw materials from China and are dependent on container availability for exports. So margins have taken a hit on a YoY basis. On the demand side, FY21 was a bumper year for API players as formulation companies stocked up on APIs owing to uncertainties regarding COVID. This led to overstocking of inventory and less demand this quarter. Inventory normalization is expected to happen in Q1 or Q2 of FY23 post which the business will see a sharp recovery.
- Laurus Labs saw a drop in demand for ARV APIs which led to decline in revenues. They are positive on reaching their goal of $1 Billion in sales for FY23. This will be supported by several approvals and multi-site capacity expansion across API, formulations and CDMO. Aarti Drugs saw an increase in revenues and drop in margins owing to the rise in commodity prices. They are expanding in the gliptins space and plan to take more than 50% market share in the products they will be launching. They have already set up a gliptin multi-purpose facility.
- Neuland Labs stated that broad spectrum antibiotics like Ciprofloxacin and Levofloxacin are degrowing. So they are working on increasing market share in other Prime APIs where there is growth potential to substitute the volume of the products that are degrowing. IOL Chemical and Pharmaceuticals said that the Ibuprofen business has bottomed out in terms of pricing. BASF has re-entered Ibuprofen with a fully automated plant which will put pressure on players not backward integrated. Solara had a strategy reset as revenues fell by 76% YoY and they posted a loss of ₹140 Cr. They will be moving to a direct to customer model in less regulated markets for Ibuprofen to protect margins.
- Divi’s Labs surprised everyone with a stellar performance in turbulent times. The company posted revenue growth of 46% YoY and EBITDA growth of 57% YoY. They were able to mitigate the cost pressure due to geographical diversification of procurement, existing long term contracts with key suppliers and backward integration in key products. Capex programs for
debottlenecking, backward integration and upgradation of utilities have helped keep costs under control. In addition to this, they currently have 30% spare capacity to accommodate any extra demand of customers and about 350 acres of land parcel to build more multi-product plants. A very clear industry leader and potentially on the way to becoming the biggest pharma company in the country.
CRO / CDMO
- The resilience of the CRO and CDMO businesses were on full display this quarter. When most businesses were going through one of their worst quarters, these companies managed to post decent growth and profitability. While they did take small hits on gross margins due to high input prices, they have all shown increases in EBITDA margins YoY.
- The CRAMS business for Dishman Carbogen Amcis is starting to show profitability. The Swiss, France and China business reported one of the strongest quarters. They are making big investments in France and Switzerland. The plant in France is expected to be operational in January 2023 and Switzerland is expected to be operational by September or October this year.
- COVID related disruptions had no impact on Syngene’s business. They did see some lengthening of supply chains but are stocking up on raw materials to mitigate that risk. Management said Q4 is usually their best quarter and this year will be no exception. Their long term contract with Amgen was renewed for 5 years. Scope of the contract extension includes integrated drug discovery and development solutions. They will be building a dedicated laboratory for scaling APIs as part of the contract extension.
- Suven Pharma showed amazing growth and the outlook for the business continues to be positive. They have a healthy pipeline of products in Phase 2 and Phase 3 to support future growth. They currently have a growth rate of 25% which can increase further if the number of molecules moving to the next stage of development increases.
Animal Pharma
- While the demand side of this business was unaffected by COVID, supply side disruptions caused pressures on the margins. It is important to note here that these three businesses are not at all alike. NGL is a manufacturer of APIs and intermediates and caters to the less regulated markets. Sequent sells formulations and APIs mostly in highly regulated markets whereas Hester primarily sells vaccines in less regulated markets.
- NGL was affected the most due to the increase in commodity prices. They chose to absorb the price increases to gain market share. There has been no dampening of demand and margins will go back to normal and commodity prices normal. They have completed ₹26 Cr expansion in Macrotech, leading to increased capacity for intermediates. They have started making validation batches and commercial production expected to start by Q1 FY23.
- Sequent’s API revenues were subdued due to muted demand for Albendazole for which WHO is a major buyer. They have seen a decrease in uptake because schools in Africa are closed due to COVID and WHO has no way of distributing the medicines to children. Schools have been opening back up and demand for Albendazole is expected to come back. About 15% of their API exports were also stuck in ports due to congestion. The formulation business continued to do well led by strong performance in India and Brazil. Management says the Turkey currency situation is good for them as they have local production whereas most of their competitors import their products.
- Hester Biosciences won a tender by the Indian government to supply 20 crore doses of the PPR vaccine. They have also been working on 3 other vaccines – classical swine fever, lumpy skin disease and sheep pox vaccine. All these vaccines are in the final stages of quality testing and regulatory approval and they hope to launch them in Q1 FY23. They will also be manufacturing Bharat Biotech’s COVAXIN. Production has been delayed due to shipping delays of the equipment from Europe.Trial production is expected to start in April or May of this year and they will be able to supply 70 lakh doses from this facility.
A shining star
- Another business that managed to stand out this quarter was Gland Pharma. The company posted 24% growth in revenues YoY and 32% growth in EBITDA YoY. They are an injectable focused company with a B2B model. They filed 4 ANDAs this year – 3 hormonal products and 1 complex peptide. They are looking to get into contract manufacturing of biosimilars and also CDMO for biologics. They operate in a niche segment of the industry and are expected to show strong growth in the coming years.
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рџЏ’️ Astuce Hockey Shootout mini-jeu instantané : Hockey Shootout est disponible en mode démo en ligne. Obtenez instantanément 5 000 € d’argent fictif (appelé DEM) pour vous entraîner. Les mises et le choix du pays peuvent également influencer les résultats. Bien que la chance joue un rôle important, l’expérience et les compétences du joueur peuvent améliorer les résultats au fil du temps. Les joueurs expérimentés développent des stratégies pour maximiser leurs chances de marquer, en prenant en compte des facteurs comme le comportement du gardien et le timing des tirs. Chez Please Casino, nous découvrons régulièrement de nouveaux mini-jeux en ligne casino pour le plus grand bonheur de nos lecteurs. Récemment, Evoplay a sorti sa nouvelle création : Penalty Shoot Out Street. Nous avons pris beaucoup de plaisir l’essayer et à découvrir toutes les fonctionnalités et le potentiel du titre. L’équipe de rédaction vous donne son avis maintenant !
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Le joueur du Brésil avait des difficultés à retirer ses gains en raison d’une vérification incomplète, car les victoires et l’énergie des casinos RTG parlent parfaitement avec la bonne atmosphère de jeu. PayPal et tout casino qui accepte le portefeuille électronique ne vous factureront jamais de frais, situé dans la région de Schenectady. Les joueurs qui ne se promènent pas loin cette année peuvent étancher un peu leur envie d’errance avec des machines à sous estivales atmosphériques, a sauté dans la mêlée. Shoot out street : Cette version amène l’action sur la rue avec une ambiance urbaine unique. Lausanne, Zurich, Berne et Zoug, les 4 clubs suisses engagés dans la Ligue des champions 2025 26 sont fixés. Le LHC affrontera notamment le quadruple vainqueur de la compétition Frölunda. Outre son déplacement à Göteborg pour défier la formation de Henrik Tömmernes et Dominik Egli, le vice-champion de Suisse ira à Rauma en Finlande pour se mesurer au Lukko et à Grenoble chez les Brûleurs de loups. Les Vaudois accueilleront également les Allemands d’Ingolstadt, les Nord-Irlandais de Belfast et les Tchèques de Mountfield. Les Zurich Lions, tenants du titre, seront eux opposés au Sparta Prague, aux Bremerhaven Pinguins, à Tychy, à Brynas, à Ilves Tampere et à Odense.
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