I agree partially in that there will be a leadership change but not necessarily from Pharma per se. Within Pharma sector itself there would most likely be a churn and new set of leaders may emerge. Recent events such as FDA Warning Letters/Import Bans, Price-gouging being hotly debated among US Presidential candidates will continue to contribute to this churn. But these headwinds can be an opportunity for the second-rung midcap pharma such as Cadila/Biocon(with Biosimilar Plays), Aurobindo/Lupin (Complex Generics) to throw themselves into the gauntlet and take the leadership mantle.
With respect to the existing portfolio picks, i will restrict myself to Pharma which i can say with fair confidence is my Circle of competence
There are no questions about the management pedigree, execution capability and integrity. But what i fear is they have left it too late to join the US Bandwagon. They have a very small pipeline with no indication of complex generics amongst it. They do have the rep of bringing first-time launches into the Indian/African markets, but they are in "me-too" segments. Moreover, there is no visibility from DMF filings abt potential ANDA's. If we take Aripiprazole, there are 49 patent litigations (of which 7 belonging to the FTF exclusivity group) in US Courts, with Ajanta is among those awaiting closure.
So even if Ajanta gets the eventual approval, the market is essentially commoditized to have any meaningful impact on revenues. So unless, the ANDA is Para-IV or a complex generic with limited competition, one cannot expect windfall gains.
Next 2-3 yrs, Ajanta with small base effect can have growth in earnings. But by FY18 if we do not start seeing complex generics filings, then it starts getting tough.
My inference is that, apart from Para IV filings differentiation comes from the below possible pathways:
1 Complex Generics - Peptides, Copaxone, NBCD.
2 NDDS - Drug Delivery mechanisms like nasal, patches etc.
4 Orphan Drugs - This satisfies mgmt criteria to cater to unmet needs
With the above aspect, Alembic looks better placed than Ajanta with their recent ramp-up in R&D by setting up dedicated centre, successful approval and launch of gPristiq thru 505(b)(2) pathway, latest onco DMF Filing.
Shilpa still looks good as immunotherapy for cancer is still evolving and small-molecule drugs will continue to remain in focus atleast till FY20, as NDA's use them as part of combination drugs with other small molecule API or more-complex biologics.
Disc: Had sold off Alembic in Mar-Jul 2015 (felt valuation was very expensive) and Ajanta in recent correction to shift to Torrent and further add Shilpa. Would have loved to add back Alembic in today's wild correction at 515 but lack of fresh funds leave me rueful but not sad.
Coming back to topic, with respect to future opportunities of long-term bets (FY20 and beyond) one needs to look at the usual suspects which are prone to disruptive technologies/data-deluge and more importantly which are consumer-centric -
Digital banking - Companies which build scalable digital platforms stand a great chance to capitalize and even established IT service cos can cash in as there is the carrot of on-tap licencing of payment banks in future. After all there is only so much one can squeeze from the automation and IoT if one cannot monetize and make a product out off it.
Blockchain which RBI is actively studying as a possible technology to minimize settlement timelines. Imagine if one can do away with T+2 settlement
Education - Excellent thread by @rohitbalakrish_ on MT Educare will provide all the info.
I saw the below 2 tweets which resonated with my focus on CRO's and Life-science tech companies.
Unless pharma becomes a data-analytics company in the business of making medicines, it can never truly be patient-centric. Data, not drugs.— Salil Kallianpur (
) February 3, 2016
Today pharma is a law firm that is also in the business of making medicines. It can never truly be patient or customer-centric.— Salil Kallianpur (
) February 3, 2016
With lot of focus on Pharmacovigilance, Personalized Medicine, etc.. there is clear need for technology to remove inefficiencies to provide best-in-class patient care.
Emerging therapies based on Gene-editing such as CRISPR, or Immuno-therapy require genome sequencing to select the best-fit drug (most of the case a biologic) among the possible candidates, which has the best chance to activate the T-cells with the maximum effect, as the same drug may have different impact depending on the patient's immune system.
There is a lack of EHR/EMR (Electronic Patient Records) awareness among health-care providers in India generally. It is gaining traction among major hospitals with companies such as Ohum Healthcare, but doctor awareness continues to be a hindrance as they are used to writing the notes on paper files.
But in the long-term, as this gains traction, it has lot of positive downstream effects if one incorporates IoT (wearables and biosensors). It would help CRO's to recruit more easily and effectively and provide real-time post market surveillance data as part of Pharmacovigilance requirements.
All the above views are far-sighted, and with the recent pace of innovation it may be sooner than we think. One just needs to look out for the hidden signs.