Laurus Labs - Can Business Transform to Next Level?

[vikas_sinha]

I just have results and Divi’s and Laurus answers to base my (qualified) opinion.
Yes, it was a surprise, likely no body expected a big backlash against China.
China substitution or China+1 supply chains are to be expected though.
It takes time for such huge volumes to shift is understandable hence the Long term.

@YachnaBhatia

Q: Is increase in APIs a temporary or structural story
Increase in volumes of APIs has been across the portfolio largely due to following:
a) Chinese API supplies have gone down – we do not know whether it is because they could not manufacture or because there was lower demand for Chinese goods
b) Due to Covid, demand for antibiotics, specialized therapy medicines etc has gone down and demand for anti-viral, anti-inflammatory medicines has gone up which helped Divis.
c) US and Europe pharma companies in general seem to be preferring Indian companies over Chinese companies.
In general, trends are encouraging for Indian API players, though such trends tend to evolve over a period of time. Custom synthesis business is also expected to benefit from the China issue, growth outlook is strong on account of their chemistry, technical capabilities (which have a high gestation period).

Divi’s is also not saying anything definite, gives us options about what the reason might be, I would think it is the lower demand at play here and not the lack of manufacturing ability. (after all Q1 period was much better for China than Q4)

Laurus says they getting inquiries (non ARV API) and will expect materialization in medium term. (about 2 years)