The domestic formulations market has been improving month-on-month and has shown a positive growth for the last couple of months. Select companies such as Sun, Lupin, Ipca, Alembic and Indoco will continue to outperform, Karvy Stock Broking said in its report.
Rupee depreciation will continue to help export oriented pharma companies in this quarter. It has depreciated by 13.8% YoY over Q4FY13 and appreciated by 0.75 % Q-o-Q over Q3FY14. Yen has depreciated 2% YoY, however, on preceding quarter yen appreciation has been 3.7 %, it said.
IPM growth for 4QFY14 is at 6.6% YoY, companies that have witnessed higher than industry growth in 2M are Sun Pharma (17.8%), Torrent (15.7%), Zydus Cadila (5.9%), Ipca (26.6%), DRL (4.5%), Cipla (5.5%), Lupin (12.4%), and Alembic Pharma (12.1%).
Overall, there were 21 ANDA approvals in the US market. Lupin has got maximum 5 approvals in our space, Zydus Cadila has 4 approvals while DRL and Sun Pharma has got 3 approvals each. In midcaps, Ipca Labs has received 2 approvals while Alembic and Unichem have also got 1 approval each.
"We expect 23.2% YoY improvement in revenues for Q4FY14 for companies in our space. Revenue growth for Sun Pharma (48.9% YoY), Lupin (21% YoY) and Cadila Healthcare is at (20.3% YoY). Net Profit growth for the companies (ex-Ranbaxy) will be to the tune of 15.5% for the quarter," karvy added.
Karvy likes Sun Pharma, Dr Reddy Labs and Lupin in the large cap space while Unichem Labs and Indoco Remedies remains its top pick in the midcap cap space.
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