Healthcare
7 August 2018
Healthcare
Motilal Oswal values your support
in the Asiamoney Brokers Poll
2018 for India Research, Sales and
Trading team.
We
request your ballot.
Gauging gains/losses in US generics post recent approvals
Rating companies based on net gain or net loss in US business
Company name
Alembic Pharmaceuticals
Alkem Laboratories
Aurobindo Pharma
Cadila Health
Cipla
Dr Reddy’ s Labs
Glenmark Pharma
Lupin
Strides Shasun
Sun Pharma
Torrent Pharmaceuticals
We have analyzed incremental ANDA approvals over the past six months and the
competitive intensity in top products for Indian pharma companies to gauge the net
effect on their US generic business, assuming no change in the intensity of bargaining
by pharmacy benefit managers (PBMs) and/or distributors.
For companies like GNP, CIPLA and ARBP, the incremental business from new launches
would be higher and erosion in base business would be lower due to marginal increase
in the number of manufacturers getting approval for products in their base portfolio.
DRRD would see an offset in incremental business by loss due to increase in the
number of manufacturers getting approval for products in their base portfolio.
SUNP and CDH would see marginal decline in US sales, as base business erosion would
be a tad higher than business gain from new approvals.
More headwinds than tailwinds for US generics in the last 12-18 months:
The key
drivers for growth in US generics are the pace and quality of filings/subsequent
approvals. The key impediments to growth are: (1) increase in the number of
manufacturers getting final approvals, resulting in greater competition, and (2)
increase in the bargaining power of PBMs/distributors. The growth impediments
dominated in FY18, resulting in a contraction in revenue from US generics.
Gains from new launches to be higher than losses due to increased competition in
products forming base portfolio for GNP, CIPLA and ARBP:
We have analyzed the
competitive scenario for new launches (company-wise) in the last six months to
understand the scope of incremental business. We have also looked at the increase
in the number of companies getting final approval for products forming the base
portfolios of the companies with new launches. Assuming no change in the intensity
of negotiations by PBMs/distributors, we find ARBP, CIPLA and GNP to be gaining
business from new launches after netting off the loss in business due to increase in
the number of manufacturers for products in their base portfolio.
Losses due to increased competition in products forming base portfolio to be
higher than gains from new launches for SUNP and CDH in the near term:
There
Research Analyst
Tushar Manudhane
have been instances – SUNP and CDH – wherein the negative impact on base
Tushar.Manudhane@motilaloswal.com
business has continued to be higher than the gains in business from new approvals.
+91 22 6129 1536
We have excluded specialty portfolio and considered only the generic business of
Kumar Saurabh
(Kumar.Saurabh@motilaloswal.com)
SUNP. There has been an increase in the number of manufacturers for products that
+91 22 6129 1519
had higher economic value and limited competition. Loss of market share and
Rajat Srivastava
considerable price erosion in those products has impacted these companies.
Rajat.Srivastava@motilaloswal.com
+91 22 6129 1557
Ankeet Pandya
Ankeet.Pandya@motilaloswal.com
+91 22 6129 1552
We intend to track meaningful launches and competition in key products company-
wise on a monthly basis for a near-term outlook on US business.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.
7 August 2018
1
 Motilal Oswal Financial Services
Healthcare
Rating companies based on net gain or net loss in US business
We have assigned companies star ratings depending on net gain or net loss in US
business over the last six months. We have assigned ratings between 5 blue stars
and 5 red stars. The top rating is 5 blue stars to companies that have zero loss in
existing base and considerable increase over base business of FY18. The bottom
rating is 5 red stars to companies that have had net loss in US business over the past
six months and have suffered considerable impact on FY18 base business.
Exhibit 1: 7 out of 10 companies have varying blue-star ratings and three companies have red-star rating
Companies
GNP
Cipla
ARBP
LPC
ALPM
STR
DRRD
CDH
TRP
SUNP
FY18 sales
(USD m)
479
386
1111
880
139
120
893
871
164
1316
Incremental
gain (USD m) from
new approvals
141
101
208
84
7
21
24
91
2
20
Incremental loss
Incremental
Incremental 12M
(USD m) due to
gain/loss over
gain/loss till date
rise in No. of Producers
FY18 (%)
15
126
26.3
8
35
50
2
18
23
100
4
45
93
173
34
5
3
1
(9)
(2)
(25)
24.2
15.6
3.9
3.2
2.6
0.1
(1.0)
(1.5)
(1.9)
Score
Note: Excluded specialty portfolio of SUNP in US market; Source: MOSL, Bloomberg, Industry
Valuation and view:
Though there has been a reduction in revenue and profitability
in the US generics space over the last one year, it remains key driver for growth on
the back of differentiated products, which are complex to develop and/or
manufacture. We remain selectively positive on companies having such product
portfolios and that have been consistent in regulatory compliance.
Our top pick: Aurobindo Pharma
Exhibit 2: Valuation summary
Company
Alembic Pharma
Alkem Lab
Ajanta Pharma
Aurobindo Pharma
Biocon
Cadila Health.
Cipla
Divi's Lab.
Dr Reddy's Labs
Fortis Health.
Glenmark Pharma.
Granules India
Glaxosmit Pharma
Ipca Labs.
Jubilant Life
Laurus Labs
Lupin
Sanofi India
Shilpa Medicare
Strides Shasun
Sun Pharma.Inds.
Torrent Pharma.
Reco
Neutral
Buy
Buy
Buy
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
CMP
(INR)
590
2,140
1,136
620
574
373
629
1,164
2,259
146
589
108
3,267
779
758
433
865
6,150
394
392
570
1,681
TP
(INR)
540
2,400
1,560
750
625
460
540
1,270
2,170
171
535
130
2,888
825
1,020
552
865
6,590
593
481
610
1,430
EPS (INR)
FY18 FY19E FY20E
21.9 25.0 28.2
58.9 76.1 100.0
53.0 51.5 65.0
42.7 46.3 50.0
6.2 10.6 20.9
16.9 18.2 20.7
20.0 24.9 30.0
33.0 43.3 52.6
64.7 99.3 120.6
-2.3 1.4 4.8
28.5 29.4 35.6
5.7 6.8 8.7
39.3 61.3 69.4
19.0 30.0 39.3
45.6 63.0 73.3
15.8 21.1 31.2
46.8 36.2 48.0
141.7 166.8 191.6
12.8 23.1 28.5
11.3 16.1 28.1
13.5 19.0 25.1
53.7 48.1 65.0
P/E (x)
FY18 FY19E FY20E
26.9 23.6 20.9
36.4 28.1 21.4
21.4 22.0 17.5
14.5 13.4 12.4
92.5 54.0 27.5
22.0 20.5 18.1
31.5 25.2 20.9
35.2 26.9 22.1
34.9 22.7 18.7
NM 102.5 30.7
20.7 20.0 16.6
19.0 15.8 12.3
83.1 53.3 47.1
41.1 26.0 19.8
16.6 12.0 10.3
27.3 20.5 13.9
18.5 23.9 18.0
43.4 36.9 32.1
30.7 17.1 13.9
34.8 24.4 14.0
42.3 29.9 22.7
31.3 34.9 25.9
P/BV (x)
FY18 FY19E FY20E
5.0 4.3 3.7
5.3 4.6 3.9
4.9 4.1 3.4
3.1 2.5 2.1
6.6 6.1 5.3
4.4 3.9 3.3
3.6 3.3 2.9
5.2 4.8 4.3
3.0 2.7 2.4
1.7 1.6 1.6
3.2 2.8 2.4
2.1 1.9 1.8
13.4 14.7 15.4
3.7 3.3 2.9
2.9 2.4 2.0
3.1 2.7 2.3
2.9 2.7 2.4
7.0 6.4 5.7
3.0 2.5 2.1
1.4 1.4 1.3
3.6 3.3 3.0
6.2 5.2 4.6
EV/EBITDA (x)
FY18 FY19E FY20E
18.5 15.7 13.8
24.5 19.0 14.7
15.0 15.9 12.6
10.4 9.1 8.0
41.4 25.9 16.2
14.9 13.1 11.6
19.2 15.0 12.6
23.5 18.7 15.4
17.1 12.1 9.8
26.0 14.9 9.5
13.5 13.2 11.0
11.3 8.9 7.2
52.2 38.6 33.3
22.1 15.0 11.8
10.0 8.0 6.7
11.0 9.5 7.3
14.3 12.9 10.2
24.8 19.9 17.2
20.4 15.0 11.7
13.6 11.6 9.2
26.0 18.2 14.0
24.3 16.2 13.5
ROE (%)
FY18 FY19E FY20E
19.6 19.3 18.8
15.1 17.4 19.8
26.0 20.4 21.5
23.8 20.9 18.7
7.2 11.3 19.2
22.1 20.1 19.8
11.3 12.9 13.6
15.5 18.6 20.5
8.6 12.5 13.6
-2.3 1.6 5.2
15.6 14.1 14.8
12.2 12.7 15.0
16.2 27.5 32.8
9.3 13.3 15.4
18.9 21.6 20.7
11.9 14.0 17.7
15.8 11.8 14.2
16.1 17.2 17.8
10.3 15.6 16.4
3.9 5.7 9.5
8.7 11.6 14.0
20.3 16.2 18.9
7 August 2018
2
 Motilal Oswal Financial Services
Healthcare
Cipla: Set to grow; minimal erosion in base portfolio
Cipla had 12 approvals and launched 11 in the past six months. We expect
annualized business potential of USD102m from these opportunities.
Exhibit 3: Good mix of approvals in terms of dosages
Active Ingredient
Cinacalcet Hydrochloride
Isoproterenol Hydrochloride
Tenofovir Disoproxil Fumarate
Phenylephrine Hydrochloride
Efavirenz
Exemestane
Testosterone Cypionate
Caspofungin Acetate
Azacitidine
Sodium Nitroprusside
Testosterone
Emtricitabine
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
Brand
Sensipar
Isuprel
Viread
Vazcupel
Sustiva
Aromasin
Depo-Testosterone
Cancidas
Vidaza
Nitropress
Testosterone
Emtriva
Dosage Form
Tablet
Injectable
Tablet
Solution
Tablet
Tablet
Injectable
Powder
Powder
Injectable
Solution,
Metered
Capsule
Approval
Date
Mar-18
Jun-18
Jan-18
Apr-18
Jun-18
Apr-18
Jun-18
Jul-18
May-18
Jul-18
Jan-18
Jul-18
Competitors
5
2
7
2
4
4
7
5
7
9
3
0
NA
Total (USDm)
ER: Extended Release
Potential
Market Size
Annual Sales
(USDm)
(USDm)
1700
43.4
148
750
56
105
77
191
24
32
74
22.6
12.0
8.6
6.2
4.6
3.0
1.0
0.5
0
0
0.0
101.9
Source: MOSL,Bloomberg,Industry
Incremental business from new launches would be higher than loss in business from
competition in the base portfolio.
Exhibit 4: Slight loss in business, as there are already considerable number of companies in those products
Active Ingredient
Topiramate
Amlodipine Besylate
Atorvastatin Calcium
Gabapentin
Number of incremental
Approx.
Total approvals Approval prior
approvals in last 9
contribution
till date
to 9Ms
months
to US sales
1
12
11
14.3%
1
2
1
26
10
14
25
8
13
9.4%
5.6%
5.1%
7.9
Source: MOSL,Bloomberg,Industry
Remarks
~34% of portfolio saw
incremental approval,
however, competitive intensity
is already high in those
products
Probable business loss (USDm)
NET POTENTIAL GAIN: USD93m
7 August 2018
3
 Motilal Oswal Financial Services
Healthcare
GNP: US sales to grow more than loss in base business
GNP had 7 product approvals and launched all of them in the past six months. These
are expected to generate incremental sales of USD141m (annualized).
Exhibit 5: Healthy launches in recent past to drive US sales
Active Ingredient
Colesevelam Hydrochloride
Tacrolimus
Colesevelam Hydrochloride
Ethinyl Estradiol; Norethindrone Acetate
Clobetasol Propionate
Clobetasol Propionate
Clobetasol Propionate
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Brand
Welchol
Protopic
Welchol
Loestrin
Clobex
Cormax
Embeline
Dosage Form
Tablet
Ointment
Suspension
Tablet
Spray
Cream
Solution
Approval
Competitors
Date
May-18
Apr-18
Jul-18
Jun-18
Mar-18
May-18
Apr-18
2
1
1
4
6
10
10
Market Size
(USDm)
520
109
73
41
31
118
46
Total (USDm)
Potential
Annual Sales
(USDm)
79.6
34.7
23.3
2.5
0.7
0
0
140.8
Source: MOSL,Bloomberg,Industry
Incremental business from new launches would be higher than the business loss due
to incremental competition in the base portfolio.
Exhibit 6: Lower impact of incremental competition
Active Ingredient
Glenmark
Omeprazole
Gabapentin
Rosuvastatin Calcium
Ranitidine Hcl
Topiramate
Pramipexole Dihydrochloride
1
1
1
3
1
1
10
14
18
10
12
13
9
13
17
7
11
12
22%
10%
9%
5%
4%
2%
14.7
Source: MOSL,Bloomberg,Industry
~51% of portfolio saw increased
competition
The competitive intensity is
already high in those products
Number of incremental
Approx.
Total approvals Approval prior
approvals in last 9
contribution
till date
to 9Ms
months
to US sales
Remarks
Probable business loss (USDm)
NET POTENTIAL GAIN: USD126m
7 August 2018
4
 Motilal Oswal Financial Services
Healthcare
ARBP: Well placed to grow; marginal erosion in base
ARBP received 16 product approvals and launched 10 out of them. Annualized
business potential from these launches is USD208m.
Exhibit 7: Robust approvals and subsequent launches in past six months
Active Ingredient
Atazanavir Sulfate
Ertapenem Sodium
Armodafinil
Tenofovir Disoproxil Fumarate
Naproxen Sodium; Sumatriptan Succinate
Azithromycin
Niacin
Ibuprofen
Abacavir Sulfate
Drospirenone; Ethinyl Estradiol
Cinacalcet Hydrochloride
Emtricitabine; Tenofovir Disoproxil
Fumarate
Ranitidine Hydrochloride
Sildenafil Citrate
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
N
N
Brand
Reyataz
Invanz
Nuvigil
Viread
Treximet
Zithromax
Niaspan
Ibuprofen
Ziagen
Yaz
Sensipar
Truvada
Zantac
Viagra
Approval
Dosage Form
Competitors
Date
Capsule
Injectable
Tablet
Tablet
Tablet
Tablet
Tablet, ER
Suspension
Solution
Tablet
Tablet
Tablet
Capsule
Tablet
Jun-18
Jun-18
Mar-18
Jan-18
Feb-18
Jul-18
Feb-18
Feb-18
Mar-18
Mar-18
Mar-18
Jan-18
Jul-18
Jun-18
1
2
3
7
2
5
6
4
1
10
3
2
2
5
Market Size
(USDm)
402
387
104
750
70
132
126
43
2
481
1700
2200
62
330
Total (USDm)
ER: Extended Release
Potential
Annual Sales
(USDm)
102.5
59.2
12.2
12.0
10.7
5.4
3.0
2.6
0.6
0
0.0
0.0
0.0
0.0
208.1
Source: MOSL,Bloomberg,Industry
Incremental business from launches is much higher than loss of business due to
incremental competition in base portfolio.
Exhibit 8: Lower scope of business loss on incremental approvals as competitive intensity is already high in those products
Active Ingredient
Clopidogrel
Simvastatin
Valacyclovir
Fluoxetine Hcl
Pantoprazole Sodium
Gabapentin
Metformin Hcl
Losartan-Hydrochlorothiazide
Montelukast Sodium
Ezetimibe
Approx.
Number of
Total approvals Approval prior
incremental approvals
contribution
till date
to 9Ms
in last 9 months
to US sales
1
1
1
2
1
1
3
1
1
1
15
14
10
9
12
11
11
9
14
13
14
13
18
15
13
12
20
19
9
8
Probable business loss (USDm)
8%
5%
5%
4%
4%
4%
3%
2%
2%
2%
34.6
Remarks
Marginal increase in competition
and in those products which
already more than 10 ANDA
approvals.
~39% of portfolio saw
incremental approvals.
Source: MOSL,Bloomberg,Industry
NET POTENTIAL GAIN: USD173m
7 August 2018
5
 Motilal Oswal Financial Services
Healthcare
LPC: Increased competition in base to overshadow
business from new launches
LPC received 9 approvals and launched all these products. We expect annualized
sales potential of USD84m from these opportunities. Due to seasonality, potential
sales from g-Tamiflu would be higher in 2HFY19.
Exhibit 9: New launches to aid moderate incremental business compared to…
Active Ingredient
Oseltamivir Phosphate
Oseltamivir Phosphate
Tetrabenazine
Desoximetasone
Drospirenone; Ethinyl Estradiol;
Levomefolate Calcium
Clobetasol Propionate
Nystatin; Triamcinolone Acetonide
Clobetasol Propionate
Hydroxychloroquine Sulfate
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Brand
Tamiflu
Tamiflu
Xenazine
Topicort
Safyral
Clobex
Mykacet
Cormax
Plaquenil
Approval
Dosage Form
Date
Suspension
Capsule
Tablet
Spray
Tablet
Spray
Cream
Cream
Tablet
Feb-18
Jan-18
Apr-18
Mar-18
Jun-18
Mar-18
May-18
Jan-18
Jul-18
Competitors
2
6
6
1
2
6
8
10
11
Market Size
(USDm)
358
467
288
20
22
31
62
118
215
Total (USDm)
Potential
Annual Sales
(USDm)
54.8
11.1
6.9
6.2
3.4
0.7
0.5
0
0
83.6
Source: MOSL, Bloomberg, Industry
Business loss due to incremental competition in base portfolio is expected to be a
tad higher than incremental business from new launches
Exhibit 10: …loss in business due to increased competition in key products
Active Ingredient
Metformin Hydrochloride
Ethinylestradiol Iron Ferrous
Fumarate; Norethindrone Acetate
Ethinylestradiol Iron Ferrous
Fumarate; Norethindrone Acetate
Fenofibrate
Methylergonovine Maleate
Ethinylestradiol Levonorgestrel
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
1
3
2
14%
3
3
2
1
1
10
10
8
2
4
7
7
6
1
3
7%
5%
4%
3%
3%
50.7
Source: MOSL, Bloomberg, Industry
Remarks
~36% of portfolio saw
increased competition
Some of the products have
been niche opportunities
Probable business loss (USDm)
NET POTENTIAL GAIN: USD34m
7 August 2018
6
 Motilal Oswal Financial Services
Healthcare
Alembic: New launches to offset loss in base
ALPM received three approvals and launched all in the past six months. We expect
annualized business potential of USD6.5m from these opportunities.
Exhibit 11: Slow pace of approvals
Active Ingredient
Bupropion Hydrochloride
Acyclovir
Doxycycline Hyclate
Launched
(Y/N)
Y
Y
Y
Brand
Bupropion
Hydrochloride
Zovirax
Vibramycin
Dosage
Form
Tablet
Ointment
Capsule
Approval
Competitors
Date
Jun-18
Apr-18
Jun-18
5
7
6
Market Size
(USDm)
80
145
37
TOTAL (USDm)
Potential
Annual Sales
(USDm)
3.3
2.3
0.9
6.5
Source: MOSL,Bloomberg,Industry
Incremental business from new launches would be a tad higher than business loss
from incremental competition in base portfolio.
Exhibit 12: Products already have strong competitive intensity; incremental approvals to have marginal impact on business
Active Ingredient
Celecoxib
Aripiprazole
Fluoxetine Hydrochloride
Fluoxetine Hydrochloride
Aripiprazole
Olmesartan Medoxomil
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
3
13
10
4%
3
2
2
3
1
12
12
12
12
12
9
10
10
9
11
4%
3%
3%
2%
2%
2.3
Source: MOSL,Bloomberg,Industry
Remarks
~27% of portfolio saw slight
increase in competition as
those products already had
more than 10 approvals.
Probable business loss (USDm)
NET POTENTIAL GAIN: USD5m
7 August 2018
7
 Motilal Oswal Financial Services
Healthcare
STR: Sales to grow but with a lag; net effect marginal
STR had 9 approvals and launched 8 of them. We expect annualized business
potential of USD21m from these opportunities. Due to seasonality, sales from g-
Tamiflu would be higher in 2HFY19.
Exhibit 13: Though product launches would drive sales…
Active Ingredient
Oseltamivir Phosphate
Tenofovir Disoproxil Fumarate
Efavirenz
Ketoconazole
Nystatin; Triamcinolone Acetonide
Lamivudine
Cyproheptadine Hydrochloride
Piroxicam
Cinacalcet Hydrochloride
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Y
N
Feldene
Sensipar
Brand
Tamiflu
Viread
Sustiva
Nizoral
Mykacet
Epivir
Approval
Dosage Form
Competitors
Date
Capsule
Tablet
Tablet
Tablet
Ointment
Tablet
Tablet
Capsule
Tablet
Jun-18
Jan-18
Mar-18
Jun-18
Jan-18
Apr-18
Apr-18
Jan-18
Apr-18
6
7
4
3
8
8
9
10
3
Market Size
(USDm)
725
750
115
7
62
27
20
11
1700
Total (USDm)
Potential
Annual Sales
(USDm)
9.2
3.2
6.8
0.8
0.5
0.2
0
0
0.0
20.9
Source: MOSL,Bloomberg,Industry
Incremental business is expected to be marginally more than loss in business due to
competition in base portfolio.
Exhibit 14: …increased competition in key products may offset the gain
Active Ingredient
Ranitidine Hydrochloride
Dutasteride
Calcitriol
Buspirone Hydrochloride
Mycophenolate Mofetil
Potassium citrate
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
3
10
7
30%
2
0
1
1
1
18
4
10
8
5
16
4
9
7
4
10%
8%
7%
4%
18%
17.8
Source: MOSL,Bloomberg, Industry
~77% of portfolio saw
increased competition
Remarks
Probable business loss (USDm)
NET POTENTIAL GAIN: USD3m
7 August 2018
8
 Motilal Oswal Financial Services
Healthcare
DRRD: New launches to just offset loss in base
DRRD received 8 approvals and launched 3 products out of them. We expect
annualized business potential of USD24m from these opportunities.
Exhibit 15: Medium term potential approvals yet to kick in
Active Ingredient
Atomoxetine Hydrochloride
Tetrabenazine
Neostigmine Methylsulfate
Tobramycin
Buprenorphine Hydrochloride; Naloxone
Hydrochloride
Launched
(Y/N)
Y
Y
N
N
N
Brands
Strattera
Xenazine
Bloxiverz
Kitabis Pak
Suboxone
Dosage Form
Capsule
Tablet
Solution
Solution
Film
Approval
Competitors
Date
Feb-18
Jan-18
Jul-18
Jul-18
Jun-18
4
6
6
5
1
Market Size
(USDm)
284
288
185
99
1800
Total (USDm)
Potential
Annual Sales
(USDm)
16.9
6.9
0.0
0.0
0.0
23.8
Source: MOSL,Bloomberg,Industry
Business loss due to higher competition in base portfolio is expected to be more
than incremental business from new launches.
Exhibit 16: New approvals seen in limited-competition products over past nine months
Active Ingredient
Decitabine
Metoprolol Succinate
Azacitidine
Tizanidine Hydrochloride
Ranitidine Hydrochloride
Tacrolimus
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
2
6
4
7%
2
2
1
3
2
5
6
10
10
6
3
4
9
7
4
7%
3%
3%
3%
3%
23.2
Source: MOSL,Bloomberg,Industry
Remarks
~26% of portfolio saw
increased competition.
Products had few
competitors and thereby
increases risk of higher
business erosion for DRRD
Probable business loss (USDm)
NET POTENTIAL GAIN: USD1m
7 August 2018
9
 Motilal Oswal Financial Services
Healthcare
CDH: Competition in niche products may drag overall
business
CDH received 25 approvals and launched 10 in the past six months. We expect
annualized business potential of USD91m from these opportunities.
Exhibit 17: Though approvals and launches are at healthy pace…
Active Ingredient
Metoprolol Succinate
Succinylcholine Chloride
Omeprazole; Sodium Bicarbonate
Dutasteride; Tamsulosin Hydrochloride
Methylprednisolone
Bumetanide
Glipizide
Cholestyramine
Nifedipine
Zolmitriptan
Cinacalcet Hydrochloride
Launched
(Y/N)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
Brand
Toprol
Quelicin/Ane
ctine
Zegerid
Jalyn
Medrol
Bumex
Glipizide
Prevalite
Procardia
XL/Adalat CC
Zomig
Sensipar
Dosage
Form
Tablet, ER
Injectable
Capsule
Capsule
Tablet
Tablet
Tablet, ER
Powder
Tablet, ER
Tablet
Tablet
Approval
Date
Mar-18
May-18
May-18
May-18
Apr-18
Apr-18
Jul-18
Jul-18
Jun-18
Jul-18
Apr-18
ER: Extended Release
Competitors
5
1
5
2
6
4
5
3
4
11
3
Market Size
(USDm)
690
100
300
55
299
85
70
22
22
446
1700
Total (USDm)
Potential
Annual Sales
(USDm)
28.2
25.5
10.2
8.4
7.1
5.0
2.9
2.6
1.3
0
0.0
91.2
Source: MOSL, Company,Industry
Incremental business from new launches would be marginally lower than loss of
business from incremental competition in base portfolio.
Exhibit 18: … incremental competition in key products of base portfolio may offset overall gain
Active Ingredient
Mesalamine
Oseltamivir Phosphate
Potassium Citrate
Hydroxychloroquine Sulfate
Metformin Hydrochloride
Eletriptan Hydrobromide
Oxycodone Hydrochloride
Potassium Chloride
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
1
1
0
34%
3
1
4
3
1
2
3
6
3
10
18
4
13
8
3
2
6
15
3
11
5
7%
4%
3%
2%
2%
2%
2%
99.6
Source: MOSL,Bloomberg,Industry
Overall ~56% of portfolio saw
increased competition.
Remarks
Probable business loss (USDm)
NET POTENTIAL LOSS: USD9m
7 August 2018
10
 Motilal Oswal Financial Services
Healthcare
TRP: Slight decline in business due to lack of approvals
TRP had three approvals and launched two. We expect annualized business of
USD2m from new launches.
Exhibit 19: Few approvals till date
Active Ingredient
Fenofibrate
Sildenafil Citrate
Mometasone Furoate
Launched
(Y/N)
Y
Y
N
Brand
Antara
Viagra
Elocon
Dosage Form
Capsule
Tablet
Ointment
Approval
Date
Jun-18
Jun-18
Jul-18
Competitors
7
10
5
Total (USDm)
Market Size
(USDm)
98
350
Potential
Annual Sales
(USDm)
1.6
0
0.0
1.6
Source: MOSL,Bloomberg,Industry
Business loss due to increased competition in base portfolio is expected to be more
than incremental business from new launches.
Exhibit 20: Incremental competition in few products over past nine months
Active Ingredient
Aripiprazole
Pantoprazole Sodium
Rosuvastatin Calcium
Losartan-Hydrochlorothiazide
Sildenafil
Celecoxib
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
3
1
1
1
6
3
13
14
18
13
10
13
10
13
17
12
4
10
12%
8%
6%
4%
3%
3%
4.0
Source: MOSL,Bloomberg,Industry
~35% of portfolio saw
increased competition
Remarks
Probable business loss (USDm)
~35% of TRP’s portfolio saw increased competition. Competitive intensity has been
already very high in those products.
NET POTENTIAL LOSS: USD2m
7 August 2018
11
 Motilal Oswal Financial Services
Healthcare
SUNP: More scope of generic business loss due to lack of
potential approvals
Considering only the generics products of SUNP and excluding NDAs, it had 9
approvals and launched 6 out of them. We expect annualized business potential of
USD20m from these opportunities.
Exhibit 21: Product approval pace yet to pick up
Active Ingredient
Naproxen Sodium; Sumatriptan Succinate
Methadone Hydrochloride
Clobetasol Propionate
Adapalene; Benzoyl Peroxide
Benzoyl Peroxide; Clindamycin Phosphate
Paliperidone
Benzoyl Peroxide; Clindamycin Phosphate
Launched
(Y/N)
Y
Y
Y
Y
Y
N
N
Brand
Treximet
Methadose
Clobex
Epiduo
Benzaclin
Invega
Onexton
Dosage Form
Tablet
Tablet
Spray
Gel
Gel
Tablet, ER
Gel
Approval
Date
Jul-18
Mar-18
Mar-18
Jan-18
May-18
Apr-18
Jun-18
ER: Extended Release
Competitors
2
3
8
3
3
2
0
NA
300
115
Total (USDm)
Market size
(USDm)
70
75
30.5
Potential
Annual Sales
(USDm)
10.7
8.8
0.3
0
0
0.0
0.0
19.7
Source: MOSL,Bloomberg,Industry
Business loss due to incremental competition in base portfolio is expected to be
more than incremental business from new launches.
Exhibit 22: Competition seen in some niche products
Active Ingredient
Imatinib Mesylate
Olmesartan Medoxomil
Ketoconazole
Tetrabenazine
Nystatin Triamcinolone Acetonide
Clomipramine Hydrochloride
Chlorthalidone
Clobetasol Propionate
Oxycodone Hydrochloride
Number of
Approx.
Total approvals Approval prior
incremental approvals
contribution to
till date
to 9Ms
in last 9 months
US sales
1
4
3
9%
1
1
3
4
1
1
6
2
13
3
5
10
4
2
7
13
12
2
2
6
3
1
1
11
3%
2%
2%
1%
1%
1%
1%
1%
45.4
Source: MOSL,Bloomberg,Industry
~21% of portfolio saw
increased competition
Most of these products have
limited competition
Remarks
Probable business loss (USDm)
NET POTENTIAL LOSS: USD25m
7 August 2018
12
 Motilal Oswal Financial Services
Healthcare
NOTES
7 August 2018
13
 Motilal Oswal Financial Services
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
Healthcare
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,
Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of
which are available on
www.motilaloswal.com.
MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited
(BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of
Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject
company at the end of the month immediately preceding the date of publication of the Research Report.
MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short
position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in
the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and
opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though
there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may
have received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
managed or co-managed public offering of securities from subject company of this research report,
b)
received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)
received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)
Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in
this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result,
the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions.
Terms & Conditions:
This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part
or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report
is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied,
is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to
buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by
virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the
specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
Analyst ownership of the stock
Companies where there is interest
No
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have
expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities
and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)
Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only
available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from
registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered
investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption
under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional
Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional
investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,
MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of
this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject
to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore,
as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore.
Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of
whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such
Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced
in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in
this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of
independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document
(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including
those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy,
completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval.
MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform
investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this
into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and
the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall
be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees
to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL
or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100.
Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real
Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
7 August 2018
14