• 3Q FY20 should be good for India formulations, with the market up 9-10% YoY. In the US, there were no strong launches but company-specific benefits: strong flu season to benefit Lupin/Cadila (Tamiflu) and higher specialty sales for Sun on initial stocking of Cequa.
• US sales should decline QoQ for (1) Taro (-4% QoQ), (2) Cipla (price erosion in gSensipar and gVoltaren), (3) Glenmark (high competition in gFaslodex), and (4) Torrent (lower Sartan sales). DRL is expected to log high growth of 9% QoQ as 2Q was impacted by logistics issues and Ranitidine recall. We build in muted growth in Russia, as winters were mild, and the key to watch out for will be the call on intangibles of NuvaRing, where NPV has declined to below-acquisition price of US$185 mn.
• Sun's 3Q US sales should grow 2% QoQ on higher specialty sales (expect US$96 mn-97 mn vs US$91 mn in 2Q20), but we haven't built in margin expansion due to higher costs related to the Cequa launch.
• Key monitorables from calls. (1) Sun: update on Ilumya; (2) DRL: China filings; (3) Lupin: plants' remediation status, update on Levothyroxine capacity expansion, brand acquisition in the US; (4) Cipla: trade generic normalisation; and (5) Aurobindo: Sandoz deal
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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