Q2 performance of pharma cos in 2017 to be muted: Report

Drug companies are to report subdued sales even as challenges of channel consolidation and slowdown in approvals have put the industry on a backfoot. This even when the formulations business is expected to see a strong recovery, says Reliance Securities report.

“We expect the pharmaceutical companies to report subdued performance on sales, EBITDA and PAT front in Q2 FY17 led by the quiet US business on lack of fresh An Abbreviated New Drug Application (ANDA) approvals due to the pending US FDA issues. Pharma companies are likely to report sales, EBITDA and PAT growth of 10.2 per cent YoY, 9.4 per cent YoY and 14.3 per cent YoY, respectively in Q2 FY17,” the analysis reveals. 

Measures like aggressive R&D spend and scale-up in complex ANDA filings have been the key re-rating triggers. But, few operational metrics have exhibited lack of momentum like critical facilities under US FDA lens, channel consolidation and slowdown in approvals. Warning letters to Sun Pharma Halol and Cadila’s Moraiya are awaiting re-inspection from the US FDA, while Dr Reddy’s pending form 483 to three plants is still undergoing the Corrective and Preventive Action (CAPA) process. The pharma company is expected to submit its re-inspection request shortly. Meanwhile, Lupin is also awaiting the US FDA resolution for its Goa plant.