vijay M, Regarding valuations and PE of page we have discussed the topic ad nauseum on the relevant thread and I dont feel there is anything new to add from my side. If one wants to invest it is a leap of faith and people who have kept the faith have been rewarded handsomely till now. How it pans out going ahead needs to be seen.
@sunny, For SIP one needs to identify a group of stocks and keep investing over a prolonged period of time. I feel the SIP guys are best placed to handle market volatility provided they dont try to be over smart and try timing the markets.
@nikhilupai, Biosimilars are in their infancy in Indian pharma sector and will take some time to take off. Currently the exhorbitant price of these molecules cant be justified to treat chronic diseases and hence they are not taking off in a big way. But in US scenario might be different due to high level of health insurance penetration. For Indian companies to compete in the regulated US markets is going to require a big effort in terms of R&D spends. But currently with a slew of products going off patent the way to go forward I feel is to play the theme going on rather then the fear of missing something which is still some time away.
Prabhushankar, I treat most IPOs as Its probably Overpricedā¦ And hence would take a call after some time once it starts showing some performance. Or there is sharp dip in prices.
Hitesh Sir,
What is your view on Heritage Foods? Heavily invested in this company.
Unable decide whether to exit or stay in the counter. Business is very good but run by politicians.
I am in catch 22 situation. Please help.
Reading the news now a days I find that the lobby against India Pharma Companies is growing stronger and stronger and looks like all white (racist - yeh I am) nations are up arms against our Pharma Industry.
Deep Inside I am not very comfortable holding Pharma heavy folio.
US going to elections and a new unclesam or auntysam, I wonder what all protective measures will US get into and where would it lead and what it means to Indian Pharma Industry
affordable and cheaper healthcare is a political win win for all parties,.older the population gets the more affordable medicines they will require.usfda is a blessing in disguise for indian pharma as it has raised the quality of indian pharma cos in all respects, so i feel no need to worry.the healthcare industry in the usa is unanimous that they need to bring down costs of health care.
Similar challenges have been faced by IT in the last decade, but hasnāt materially impacted growth of IT companiesā¦ Even Japanese companies faced the same scenario in USā¦ key is to remain competitive and Indian pharma seems to be heading in the right direction with the low cost model
IT(service based) Pharma(Product based). The Quantum and intensity of Govt and its Agencies interference differs. However the point of cheap and better healthcare is promising. As I said Fingers crossed.
Have you had a look at Themis medicare? The stock looks like a turnaround just by looking at the numbers, but would you be able to comment on its products/growth plans by any chance? Thanks.
If a public pharma company is planning to get their plant approved by USFDA, do they have to publish or announce it in advance? Is there any public site where we can see which companies have applied for USFDA approvals for their plant?
If yes, How long does it take for a company to get their USFDA audit completed? Like ANDAs, is there are process / timeline/ timeframe for this?
Reason for my above questions - How to spot the existing sub 500 crore pharma companies trying to get into high margin US business early in the game? Say lincoln, coral, mecury. etc.
I dont think thereās any site which lists companies who have applied for USFDA approvals. But most of the times companies do mention it in their annual reports well in advance.
And as far as I know there is no timeline for USFDA audit to get over. Usually once they are ready, companies inform usfda about their intention and fill up necessary forms and fees and then the US guys visit plants to verify the plants. Many a times companies who already have usfda approvals get surprise visits from FDA guys ā¦ this was mentioned in Unichem q2 fy 16 results presentation where 3 of their facilities passed the USFDA surprise audit without any undue observations.
I think if its a b2b company supplying to some big pharma companies then the bigger guy wants faster clearance and would guide the smaller company how to go about the process.
Dear @hitesh2710, I have a couple of questions on Neuland Labs.
Neuland Labs is a predominantly API manufacturer with 85% of revenues from APIs & the rest from CRAMS. Neuland claims that they are moving away from manufacturing of low margin commoditized APIs (like Ciproflaxacin) towards manufacturing high margin APIs (e.g. they are developing molecules in segments like Anti-psychotic, Opthalmics, Bronchodilator segments). It has 2 USFDA approved plants.
Neuland Labs has filed DMFs for 48 API Molecules.
I understand that DMFs are neither approved nor rejected. This is just a filing with the regulator that they have a specific way of manufacturing a drug(assuming Type 2 DMF).
Questions:
For example, Neuland has filed DMF for Aripiprazole(gAbilify) in the Anti-psychotic segment. Torrent has ANDA approval for gAbilify. Can Torrent source API from Neuland?
2.Since DMFs are neither approved nor rejected, I am not able to appreciate what qualifies Neuland (or any API manufacturer) to sell a particular molecule?. Is USFDA approved site the only pre-requirement?
Request your help and views to identify some pharma companies based on certain themes. For ex. Lifestyle diseases like Heart trouble, Asthma, High BP and Diabetes are on a rise in our country. Wish to know a few companies who are leaders in these segments. I tried to search, but cannot move in the right direction. My limited knowledge and search provides info like - (a) Cipla is the world leader in Asthama & Respiratory medicine; (b) Granules India is one of the largest manufacturer of Metformin (and increasing its capacity) which is used in Diabetes.
Can you pls share your views on companies who are leaders / have significant business from any of the above areas mentioned. Pls also let me know in case of any other therapeutic area / stream (and companies in that stream) that you may feel more important or fast growing other that the above mentioned areas.
The pharma market in India is highly fragmented. Most of the companies we discuss have a presence in most of the lifestyle segments. e.g Lupin, Torrent pharma, ajanta, sun, u name it and most of them have good presence in life style segments. But as you can make out companies having only domestic presence will have a tough time due to intense competition.
The most attractive facet of pharma companies from India are their US revenues and profits. Among these one has to look at companies with presence in niche segments/complex molecules etc where competition is likely to be low.
The important criteria for listing down US facing pharma companies are:
Pipeline of filings/approvals.
Existing base business and how good that is.
Track record of company with regulatory authority (USFDA)
Management smarts ā how well does the company utilise the opportunity available.
And one has to bear in mind the fact that with companies deriving major part of their revenues from US, two main risks are those of USFDA regulatory risk and currency risk. (Small 1-2 rupee moves in currency dont matter much but a big swing of 10% or more would materially impact quantum of profits)
Ideal company could be a company which has a stable business model which gives it predictability and which is just climbing the ladder in the US. e.g Ajanta. But there again one has to be comfortable with valuations bcos very few pharma companies are available cheap now.
And if one is not too clear about the whole thing then it makes sense to buy a basket of pharma stocks and hope for the best.
Hi Hitesh,
Sorry that i am asking a very basic question. (@admins, you can delete or point to any section. i already read the pharma faq.) Could you tell the difference between generics and branded generics?. My understating was that, once a drug goes off patent, generic players will produce generic version of the same. different companies market with different names. is that the brand?. or is it the name used by the innovator?
are there any branded generic players in india?
Hi Gautham,
Alkem lab IPO document explains this difference very well.I am copy pasting the details below,hope it helps. Hitesh bhai,do you have any view on alkem lab?I spoke to a few doctor ,MR friends and they recommended their products as very good.They also seem to be a leader in Domestic pharma and on the cusp of strong growth in US and ROW.
---------------------copied from Alkem IPO Doc----------- Generic Products
āGenericā pharmaceutical products are pharmaceutical products that are not protected by patents. These are drugs marketed by different companies but which contain the same active ingredients. The costs for generics manufacturers to develop their products and obtain regulatory approval to market and sell such products are considerably lower than for patented drug manufacturers. As a result, such companies can offer the same product at a significantly reduced price. The introduction of generic products offers consumers a choice between patented or branded products and their generic counterparts, resulting in greater competition and generally lower prices for drugs in the market.
Largely due to the increase in generic drug products, when a drug goes off-patent, its price typically falls. For example, generics of āblockbusterā drugs (generally drugs having sales of more than US$1 billion) are susceptible to significant competition as a large number of players seek to enter the market within a short period of time. On the other hand, in the case of ānicheā drugs, prices may not erode as much due to lower competition, as products for niche pharmaceutical segments are typically more complex and difficult to manufacture.Generics that are marketed under different brands by different companies are known as ābranded genericsā. āPure (or otherwise known as non-branded) genericsā are not marketed under a brand, but rather use a generic or nonproprietary name. Producers of generic drugs (branded as well as pure) may sell their products in unregulated/semi-regulated markets until regulatory recognition of patents in those markets. In regulated markets,generic drugs may be sold when the patent for a particular product has expired or has been found invalid or unenforceable.
In a branded generics market, the same drug will be marketed by different pharmaceutical companies under their own brands. Brand promotion and marketing are important factors to gain competitive advantage in a branded generics market. Marketing and sales set-ups are important in this category. Consequently, pharmaceutical companies in branded generics markets expend considerable resources on building brands and strengthening relationships with doctors, often involving a large sales force. In a typical branded generics market, the first pharmaceutical company to launch a generic version of a particular product tends to take a significant share of the
market. For this reason, the speed at which a generic product comes on the market is critical for obtaining market share and maximizing revenues for a product. Generic products with popular brands typically possess significant market share and can command large pricing premiums over similar products marketed under different, lesser known brands.
In a pure generics market, trade and health maintenance organizations are the key influence in the dispensing decision (as opposed to doctors in a branded generics market). Low-cost manufacturing and an efficient distribution network, coupled with strong relationships with wholesalers and distributors, are the key drivers to succeeding in such markets. Pharmaceutical companies in pure generics markets do not require a full-fledged marketing force to liaise with doctors. Instead, smaller sales teams are employed to build relationships with wholesalers and distributors of the generic products.
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