If we’re trying to find moats in pharma, we need to look in 2 places – manufacturing and sales.
Manufacturing moats could be a unique product (preferably patented), unique process (complex or patent protected), or cost advantage (lowest cost producer).
Sales moat is mainly some sort of exclusive arrangement to supply, possibly through regulatory restrictions. Or it could be brand value, especially in OTC drugs.
The kind of business Beta Drugs is in, there is intense competition. Their product portfolio is non exclusive. They do have some unique products, but they aren’t blockbuster. In my opinion their success will depend on how aggressive they are with sales. This is the unfortunate truth of most formulation companies in India. I’m personally not a fan of aggressive sales in pharma, but that’s another discussion altogether.
To summarise, they might do well, but it’s by no means guaranteed.
Disclosure – Not invested.
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