Tag - USFDA

13 Dec

Expect 15+ USFDA approval in CY22- Alembic Pharma

Update on the Indian Equity Market:

On Monday, NIFTY ended at 17,368 (-0.8%) 143 points lower. Among the sectoral indices, only IT (+0.3%) ended higher, whereas MEDIA (-1.8%), OIL&GAS (-1.4%) and REALTY (-1.4%) led the losers. Among the stocks, AXISBANK (+2.4%), TECHM (+2.2%), and SBILIFE (+1.5%) led the gainers while BAJAJFINANCE (-3.0%), BAJAJFINSERV (-2.1%), and RELIANCE (-1.9%) led the losers.

Pharmaceuticals

Expect 15+ USFDA approval in CY22- Alembic Pharma

Excerpts of an interview with Mr. RK Baheti, CFO of Alembic Pharma with CNBC TV18 on 9th December 2021:

  • Alembic Pharma has received tentative approval from USFDA for Selexipag tablets, a drug used to treat for pulmonary arterial hypertension with a market size of $460 Mn. There are 4 existing players in the market.
  • The company can only bring the drug to the market post its patent expiry so there’s an expected delay before the drug can be formally launched post final approval which will happen in CY23.
  • The company has first mover advantage in terms of launching the product on Day 1 of Patent Expiry, however the situation remains dynamic and other companies may receive approval for the same.
  • The company has an annual run rate of 15+ approvals and the company expects to launch 15 new products in the US in CY22, with 3 Products being first to file by the company.
  • Indian companies are facing intense pricing pressure in the US Generics business, due to heightened competition. Company’s degrowth is drawn by high base effect of last year’s exceptional performance and also drawn by company benefitting from scarcity and aggressive pricing over the past 2-3 years.
  • The growth ahead is expected to be driven by new launches and first to file opportunities as the pricing degrowth will continue by 10% on an annualized basis, the company has plans to stock up inventories in anticipation of shortages to take advantage of aggressive pricing as and when the opportunities arise

 

Asset Multiplier Comments

  • The company along with its peers is facing stiff competitive pricing pressure in the US Generics business, which was a key growth driver for the company in the past few years.
  • The revenue opportunity of new launches, existing competition and cost controls are going to be key drivers of profitability for the company.

 

Consensus Estimate: (Source: market screener website)

  • The closing price of Alembic Pharma was ₹ 797/- as on 13-Dec-2021.  It trades at 23x/19x/17x the EPS estimates of ₹ 35/42/47 for FY22E/FY23E/FY24E respectively.
  • The consensus target price is ₹ 860 implying a P/E Multiple of 18x on FY24 EPS Estimate of ₹ 47

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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04 Jan

Several good products in the pipeline – Lupin

Update on the Indian Equity Market:

On Friday, Nifty closed 0.3% higher at 14,019. Within NIFTY50, ADANIPORTS (+4.4%), TCS (+2.4%), and ITC (+2.3%) were the top gainers, while ICICIBANK (-1.4%), SBILIFE (-1.0%), and HINDALCO (-1.0%) were the top losing stocks. Among the sectoral indices, PSU BANK (+3.3%), AUTO (+0.9%), and IT (+0.8%) were the top gainers while PRIVATE BANK (-0.3%), FINANCIAL SERVICES (-0.2%), and BANK (-0.1%) were the only losing sectors.

Several good products in the pipeline – Lupin

Excerpts of an interview with Mr. Ramesh Swaminathan, ED, and Global CFO, Lupin, aired on CNBC-TV18 on 30th December 2020:
● In the case of new launches- after a drought of the past few years, Lupin had several launches in the recent past. Lupin has launched 12 new products. The most important of the launches has been Albuterol. Albuterol has a large market and the overall inhalations segment is still a growing market in the US.
● Lupin has a pipeline of 150 product launches in the US over the next 3-5 years. Some of that was delayed due to plant issues but now Lupin will launch the bulk of that. Lupin’s story is all about future products in specific areas such as inhalation, complex injectables, and biosimilars.
● In the inhalations segment, Lupin is working on at least 15-20 products.
● Over the last several years, Lupin has invested 9%-9.5% of sales in R&D. This spends will pay returns in the next few years- which was lacking in the past. Lupin had a lack of good products to launch in the last 3-4 years. The company now has a few really good products which will come up in the next few years.
● In 2HFY21E, India will pick up, and going forward growth will sustain. In the US, Lupin has already reached the USD 180 mn per quarter mark and the performance will be better by 4QFY21E.
● Gross margin has been around 63-64% mark which management thinks is a good level. A lot of cost-cutting measures have been implemented which have delivered results in 2QFY21. EBITDA margin was 14.7% in 1QFY21, 16.7% in 2QFY21. Management expects that to stabilize and increase to 20%-21% by 4QFY21E.
● Lupin’s Somerset facility in New Jersey saw 13 observations. Management is disappointed but thinks things are still under control. Somerset plant is not a very big producer as compared to plants in India.
● Management is confident that Indian plants that have been impacted will get resolved. But it’s a waiting game depending on USFDA’s timeline in the covid-19 situation. There are no new filings from the Mandideep unit which has a Warning letter. The same cannot be said about Goa and Pithampur 2 which are very important sites.

Consensus Estimate (Source: market screener website)
● The closing price of LUPIN was ₹ 1,002 as of 1-January-2021. It traded at 43x/ 27x/ 22x the consensus EPS estimate of ₹ 23.4/36.8/44.8 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 968/- implies a PE multiple of 22x on FY23E EPS of ₹44.8/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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01 Jul

Replacing China as a global chemical supplier is a medium to long term story- Lupin

Update on the Indian Equity Market:

 

On Tuesday, Nifty closed marginally lower at 10,302. Within NIFTY50, SHREECEM (+3.1%), MARUTI (+2.7%), and ICICIBANK (+2.6%) were the top gainers, while BPCL(-2.5%), POWERGRID (-1.9%) and SUNPHARMA (-1.9%) were the top losers. Among the sectoral indices, AUTO (+1.1%), FMCG (+0.3%), and FIN SERVICE (+0.3%) gained the most.  PSU BANK (-1.8%), MEDIA (-1.7%) and PHARMA (-1.5%) were the losing sectors.

 

Replacing China as a global chemical supplier is a medium to long term story- Lupin

 

Excerpts of an interview with Mr. Ramesh Swaminathan, Global CFO –Lupinpublished in Economic Times dated26thJune 2020:

  • The US Generic market has seen different phases in terms of pricing in the last 2 decades. Pricing was good during 2001-2005. In the 2005-2009 period, there was a sharp decline in prices which picked up later. 2011-2015 saw some tailwinds for pricing. 2015 onward due to customer consolidation and increased competition in generic space, the Pharma companies lost bargaining power leading to pricing pressure. However today, the situation has stabilized and everything depends on the portfolio.
  • There have been a lot of Indian generic entrants in the US generic space and that is where the competition is higher. US companies such as Teva, Mylan, and Sandoz have lost market share to the new entrants. But the smaller companies are now realizing that earning ROCE is not as easy. Companies have to invest in FDA approved manufacturing facilities of different kinds, there is a waiting period for getting ANDA approvals, and there is a working capital blockage. As a result, some players are backing out which will bring some pricing stability going forward.
  • In the last several years, Lupin, along with the other bigger companies, is focusing on delivering more complex generics including complex injectables, inhalation, etc. Complex injectables as a segment are growing at over 6-7%. Inhalations segment is growing at over 15%. These segments have lower competition because of the complexity involved.
  • In the specialty segment, a lot of the products are coming into the market over the next few years, which will help with the realizations for Indian generic companies. Companies need to have deep pockets because Specialty calls for a very different kind of approach. Innovation quotient and clinical data play a critical part.
  • Biosimilars is the sunrise industry for Indian pharma companies. There are considerable entry barriers, but once a company has a clone, has done immunogenicity studies well and, then potentially development risk will be mitigated. The pricing will also be better due to lower competition. Europe has adapted more to biosimilars. Once the American market picks up, the realization for players in that market would be much higher.
  • Lupin has got into women’s health because that is one space which has been vacated by big pharma and to that extent, the competition there is much lower.
  • Replacing China as a chemical producer for the world will be a medium to long term story. India has about 25% of USFDA approved API capacities in the world but there is still some way to go when it comes to supply. The government is trying to encourage this shift but the investments have to materialize.
  • There are 3 specific growth drivers for Indian pharma companies. One is the large American market, specifically the complex products which Lupin is also getting into. Second, the Indian domestic market is still underpenetrated. Due to the COVID-19 situation, there is going to be thrust from the Indian government and more public awareness which will aid faster growth. Third, many emerging markets are underpenetrated and if the portfolio is right, there is potential for growth in those markets.
  • There might be some demand contraction in India as well as America due to COVID-19 disruption. However, it is a very temporary situation and the second half of FY21E will be much better.
  • The flavor of the day seems to be a nationalistic foot forward. We can see in India as well as in America and other parts of the world. Lupin has been conscious about this for a while and has local manufacturing in countries where it operates. For Indian pharma companies, the basic paradigm should be low-cost manufacturing from India but supplemented with local manufacturing capabilities in overseas markets.

Consensus Estimate: (Source: market screener website)

  • The closing price of lupin was ₹ 910/- as of 30-June-2020. It traded at 31.9x/ 23.4x the consensus EPS estimate of ₹ 28.5/ 38.9 for FY21E/ FY22E respectively.
  • Consensus target price of ₹ 852/- implies a PE multiple of 21.9x on FY22E EPS of ₹ 38.9.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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27 Feb

Expect to address FDA observations in time to launch Glargine: Christiane Hamacher, Biocon Biologics

Update on the Indian Equity Market:

On Wednesday, NIFTY closed lower at 11,678 (-1.0%). The worst sectoral performers were Auto (-2.1%), Realty (-1.7%) and IT (-1.4%). There were no sectoral gainers. The top gaining stocks for NIFTY50 were YESBANK (+4.9%), SBIN (+0.4%) and HCLT (+0.2%) while the losers were GAIL (-5.1%), SUNPHARMA (-3.8%) and TATAMOTORS (-3.6%).

Excerpts from an interview with Dr. Christiane Hamacher, MD and CEO of Biocon Biologics aired on CNBC18 TV on 24nd February 2020:

  • They have received three observations from US FDA under form 483 and they are procedural in nature. They largely aim at process improvements.
  • They don’t have any repeat observations and they will be submitting an action plan very soon to address these observations.
  • They are expecting to address all the observations well in time to meet the target action date for their biosimilar Glargine in June 2020 and they expect to be in a position to launch in 2nd half of this calendar year in the US by their partner Mylan.
  • So, there is no delay when it comes to launching in the second half of 2020.
  • As a transition from New Drug Application (NDA) to Biologics License Application (BLA) for certain biologics will not actually affect their submission for biosimilar Glargine.
  • That was submitted another pathway and they are very clear that they expect their biosimilar will continue to be reviewed under the same pathway. So, they don’t foresee any delay when it comes to this review process.
  • Biosimilar Glargine together with their biosimilar Trastuzumab, and their biosimilar Pegfilgratim in the US, in the near future will be a very important component to achieve the revenue guidance of USD 1 billion that they have given for FY22.
  • They see much less competition compared to other areas like oncology and they have a huge portfolio. Along with their partner Mylan, they are very well positioned to be a leading player in the insulin biosimilar space.

Consensus Estimate: (Source: market screener website)

  • The closing price of Biocon was ₹ 298/- as of 26-February-2020.  It traded at 40x/ 30x/ 23x the consensus earnings estimate of ₹ 7.5/ 10.1/ 13.1 for FY20E/ FY21E/ FY22E respectively.
  • Consensus target price is ₹ 313/- which implies a PE multiple of 24x on FY22E EPS of ₹ 13.1/-
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