Thanks for bringing this up.
Just adding some views on this to the conversation here for this one time as there is no thread on the company and it seems like an interesting situation.
- They have almost laid off a lot of their field force (several comments on YT on Novartis videos criticising the actions) - in the latest annual report no of employees is down to 81 from 500 odd earlier.
https://www.fiercepharma.com/pharma/novartis-india-plots-400-job-cuts-wake-dr-reddy-s-sales-pact
Though this is sad news and unfortunate, it has meant that OPM has tripled this quarter and reduced employee costs have a lot to do with it
EPS just for this quarter was significantly above last 2 years combined.
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The products in question which are in the agreement with Dr Reddy on 1 Mg are manufactured through co-packers and were earlier marketed by Novartis India Ltd. No link to subsidiaries for the products in question. Dr Reddy’s talks about ‘repatriating’ these in their latest con-call.
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The person who led this restructuring - CEO Sanjay Murdeshwar did a very similar change of business structure with Astra Zeneca in 2016, after which the Astra Zeneca India margin profile looks very interesting. Astrazeneca’s margins improved from 3% in 2016 to 17% in 2021.
- Valuations are very reasonable vs MNC Pharma peers, but company will need to turn around the terrible performance over the last 5-7 years. This looks like an interesting development basis the same.
Discl : Recently invested, biased.
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