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Pharmaceutical Sector trends November 2017 -
Pharmaceutical Sector trends November 2017
Equirus Securities | Published: 20 Dec, 2017  | Source :
  •  Strong M&A momentum with strategic focus on bolstering domestic formulations

▪ Torrent (TRP) acquired the domestic portfolio of Unichem for INR 36bn; TRP maintains leading positions in cardiology / gastro / CNS therapies with market shares of 5.6% / 3.1% / 6.4% respectively

• With the Unichem portfolio acquisition, TRP’s shares in these therapies are poised to increase significantly

• We believe some synergies would be realized in the form of increases in drug prices, field force rationalization and improvement in sales-force productivity

(Unichem’s INR 0.27mn vs. TRP’s INR 0.72mn sales force productivity)

• Unichem’s domestic portfolio has been valued at 4.2x sales and ~20x EV/EBITDA – which we think is reasonable considering its existing margins of 20- 21% which can be easily expanded, and some legacy brands (Unienzyme, Ampoxin and Losar) which offer significant growth potential, as per the company

• Even in comparison to previous acquisitions in the domestic space, we think the deal is reasonably valued and believe the payback period would be more than 8 years

▪ Eris Latescence agreed to acquire Strides Shasun’s branded generics business for ~INR 500 cr

• Strides’ India branded generics business comprises of a portfolio of +130 brands in the domains of Neurology, Psychiatry, Nutraceuticals and Gastro

• The transaction augments Eris’ growing position in the CNS segment

  • Biocon became the first Indian company to receive a biosimilar approval in the US for gTrastuzumab

▪ First biosimilar approved in US for the treatment of breast cancer

▪ Biocon is partnered with Mylan on the development of a broad portfolio of biosimilar and insulin products

  •  CVS acquisition of Aetna

▪ In a transformational transaction, CVS, the US retail pharmacy and pharmacy benefit manager (the middleman between insurers and drug companies), announced the acquisition of Aetna, a leading health insurer, for US$69bn

▪ A vertically integrated CVS, further consolidates buying power in US – price erosion impacting Indian pharma players is unlikely to abate in the near term

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.