will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Impact of new policy on Pharma companies
! The companies are required to provide six months prior notice to the
government before discontinuing supply of NLEM drugs. The government
however may direct the company to continue for one more year from the date
of notice
! Retailers’ margin to be revised to 16% (from 20% previously) for non-scheduled
drug
! The current selling price lower than the ceiling price cannot be hiked
We believe that valuation hangover of Indian pharmaceutical companies over
uncertainty and impact on implementation of New NPPA would be limited to one
more quarter to Q2FY14E. It means that focus over growth of domestic formulations
would be back on priority list of the companies from H2FY14E.
Company Domestic form. Revenue % Impact on DF revenue % Impact on overall PBT^
WAP formula SAP Formula WAP formula SAP Formula
Sun Pharma 31570 1.2 1.6 0.9 1.1
Cipla 34230 2.9 4.9 4.5 7.7
Dr. Reddy's Labs 13260 3.9 7.5 2.1 4.0
Ranbaxy 28270 3.6 5 8.5 11.8
Lupin 20110 1 1.3 1.1 1.4
Cadila 25490 3 5.2 5.8 10.0
IPCA 11830 1.5 2.8 3.0 5.6
Torrent Pharma 11500 0.9 1.9 1.6 3.3
Source: AIOCD, PL
^ Excluding one‐off revenues from US and based on PL estimates; Based on FY14/CY13 financials
Stock Performance
Absolute
Relative to Sensex
1M 3M 6M 12M 1M 3M 6M 12M
Aurobindo Pharma 4.4 20.6 (4.0) 66.8 5.0 15.8 (1.9) 56.5
Cadila Healthcare 2.7 5.0 (11.7) 2.9 3.3 0.2 (9.6) (7.4)
Ci pl a 6.2 0.4 (7.7) 20.9 6.8 (4.4) (5.6) 10.6
Dr.Reddy's Laboratories 2.7 16.1 17.8 37.6 3.2 11.3 20.0 27.3
Glenmark Pharmaceuticals 0.6 18.1 6.8 53.7 1.1 13.3 9.0 43.4
Jubilant Life Sciences (22.9) (33.7) (48.6) (31.0) (22.4) (38.5) (46.4) (41.3)
Lupin 8.7 33.7 38.5 51.5 9.2 28.9 40.6 41.2
Ranbaxy Laboratories (9.4) (22.1) (32.6) (32.2) (8.9) (27.0) (30.4) (42.5)
Sun Pharmaceutical Industries 3.0 20.5 38.2 64.5 3.5 15.7 40.3 54.2
Source: Bloomberg, PL Research
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