Q1 results preview: Here's why pharma companies are expected to show improvement
Sun Pharmaceutical Industries: The brokerage anticipates that domestic formulations will remain weak (+8% YoY) due to the impact of the NPPA, the patent expiration of two significant goods licenced from Merck, and the seasonal weakness for acute medications. "We expect overall EBITDA margins at about 24% (-100bps YoY) impacted partly by Halol remediation cost, consolidation of Concert’s cost and cost inflation. US revenue (~USD440mn), +2% QoQ in cc mainly on account uptick in specialty business and gRevlimid (+4% QoQ excluding licensing income in Q4).
US Specialty business continue to remain steady," the brokerage said. Aurobindo Pharma: The brokerage anticipated in its analysis that new product launches and increased market share would boost US sales by 4% QoQ to roughly USD 385 million. Europe's base growth is anticipated to be 5% QoQ lower due to clawback taxes in various European nations.
Expect low single digit QoQ growth in the API business. EBITDA margin to 16.2%, +70bps QoQ, and lowering input prices are projected to have a positive impact on gross margin. Cipla: The brokerage firm expects Cipla to have a stable quarter.
India was helped by a robust economy, new products, and price increases. US at USD195mn, consistent with the recommended base. While lanreotide share and price erosion appear to be constant, the share of albuterol appears to be declining.
"With worse already over in SAGA, expect its revenues to improve 7% YoY/2% QoQ. Expect gross margin to remain stable at 64% as benefit of price increase, input and freight cost normalisation starts flowing. EBITDA margin at ~22% aided by strong branded contribution and well within guided range," said the brokerage in its report.
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