Torrent Pharma, Sun Pharma preferred picks of Citi research in the Indian Pharma: Watchful on Aurobindo, Dr Reddy’s
Stock Market Today: The Indian Pharma companies as Sun Pharmaceutical Industries Ltd, Dr Reddy’s Laboratories, Lupin, Cipla, Torrent Pharma among others have benefitted from generic opportunities in the US providing impetus to their earnings growth. The rising pricing pressure however makes Citi Research cautious with only Torrent Pharma, Sun Pharmaceutical amongst their preferred picks.
Analysts at Citi Research in their recent report referring to NADAC (National Average Drug Acquisition Cost) trends say that the data has provided a clear picture of pricing trends in FY24, hence it is difficult to overlook the most recent trends, which indicate a steep double-digit reduction in prices during April–June’24 (2.5 months) compared to the March’24 quarter.
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National Average Drug Acquisition Cost (NADAC) is based upon a survey of actual invoices between pharmacies and wholesalers and is being published by US Medicaid on a weekly basis.
Around 80% of the top-20 baseline products for each of Aurobindo Pharma, Cipla, Dr Reddy’s Laboratories, and Lupin are declining by double digits on a quarterly basis in 1QFY25, highlight Citi Research referring to the data.
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The India and China-based pharma companies are pushing volumes that could drive unfavorable pricing trends, and the latest NADAC trends, if these hold, may corroborate their thesis, said Citi Research. The main cause of the supply disruptions in US generics, which led to a brief price stability, was import warnings at some manufacturing facilities of certain pharma companies. But the other Indian manufacturers and a few Chinese players are turning up the volume.
Citi Analysts have introduced downside 90-day catalyst watches for Aurobindo Pharma & Dr Reddy’s Laboratories. They have removed Cipla Ltd from their preferred picks.
Lupin as per them also may surprise negatively but the recent launch of overreactive bladder medication Myrbetriq may mask the potential weakness in pricing.
Citi Research prefers non-US prescription heavy names like Torrent Pharma and Sun Pharmaceutical Industries in their coverage in Indian Pharma.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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Published: 20 Jun 2024, 11:40 AM IST
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