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India narrative upbeat, US can spin positive surprise - Pharmaceuticals Preview

ICICIdirect Research 14 Apr 2023 DISCLAIMER

What’s Buzzing? 

The I-direct pharma universe (13 coverage companies) is likely to witness a decent quarter with ~11% growth YoY. This could be on the back of strong YoY growth in domestic formulations as well as better traction in the US portfolio. 


Strong growth in anti-infectives & respiratory therapies on the back of seasonality tailwinds is likely to support domestic formulations segment besides chronic traction whereas favourable currency movement and some key launches to aid growth for the US portfolio. 

Our Perspective: 

We believe our universe (13 coverage companies) will post YoY growth of ~11% to ~Rs 49,424 crore. The domestic formulations segment (select pack) is expected to post robust growth of ~13% YoY to Rs 13,869 crore. On the operational front, cost pressure is likely to ease out in the quarter as majority of the high price inventory was consumed till the previous quarter while performance will be supported by easing of freight costs. In addition to that, several new launches and ANDA approvals in the US will lead to decent topline growth during Q4FY23. US (select pack) portfolio is expected to grow ~16% YoY to Rs 14,747 crore. Besides currency movement and new launches, we expect growth to be driven by specialty business and volume gains. API segment (select pack) is expected to grow 17.4% YoY to Rs 5,097 crore. On the company’s front, Sun pharma, DRL and Cipla remain our top picks and are likely to see YoY revenue growth of 16.6%, 15.5%, 12.3% respectively. 

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