advait,
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 — 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.
| Subscribe To Our Free Newsletter |
