Pharma Outlook 2024: How are Cipla, Sun Pharma, Dr Reddy's and others likely to perform this year?

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Cipla, Torrent Pharma, Eris Lifesciences, and JB Chemicals, among others) have increased their chronic presence, focused on new product launches, and entered into new therapies. API (Active Pharmaceutical Ingredient) companies are undergoing capex, which will aid in further top-line growth; a healthy product mix and softening input costs are likely to sustain higher operating margins of ~20-30% in CY24.

We expect India's business to report higher single-digit growth in CY24 driven by deferred acute demand, an uptick in the chronic segment, higher MR productivity, new product launches, and the expectation of a healthy flu season. The US market is expected to continue to grow strongly due to the normalisation of base business prices, field force expansion, continuous acceleration of gRevlimid, and the introduction of new products (gSpiriva, gPrezista) despite pricing challenges, intense competition, and stricter regulatory compliance requirements.

Many companies are unlocking value for the shareholders. Sanofi is undergoing a demerger of its OTC (over-the-counter) segment, and Strides is expected to demerge its CDMO (contract development and manufacturing organizations) business in CY24.

Thus, we remain optimistic about the growth outlook of Indian pharma companies. Domestic Formulation Business: Indian pharma companies, such as Torrent Pharma, Alkem Lab, Eris Life Sciences, and JB Chemicals, are our top picks in the domestic formulation business.

As we advance, Torrent's focus will include cost optimisation to improve the tender segment's competitiveness, launch new products, and develop its OTC business. The management expects to maintain gross margin at 70-72% and EBITDA (earnings before interest, taxes, depreciation,