MONTHLY DOSE

MARCH 2019

MONTHLY DOSE

DECEMBER 2019

The year 2019 in the real sense explained what USFDA meant, what observations meant and what exactly was a warning letter. All these were jargons that explained what Pharma sector comprised of, but the frequency of these happening in 2019 actually made all go back to basics to understand what it really meant and implied. As per different articles, around 18 Pharma companies have received USFDA warning letters for their Indian plants in 2019, this was more than half of the all the warning letters issued by the regulatory agency. The total number of warning letters issued up till December 18 were 76. (In 2018, out of the 68 warning letters issued by the USFDA, 10 were related to India.) The first half of 2019 was bad innings for the sector which however rebounded in the second half led by growth in the domestic formulation business and strong exports.

Key happenings 2019: Although the sector underperformed on the whole, some of the positives worth a mention are the moderation of US pricing pressure, rebound in domestic formulation businesses, cost tightening efforts by the companies and focus on reducing debt. The key headers for the year included the regulatory snap-backs from USFDA for the key export market of Indian industry and efforts to capture the other markets like China and Japan. There were strong concerns across the industry pertaining to the presence of Ranitidine (cancer causing impurities) in common pills like antacids and diabetic medicines which did lead to voluntary recalls by the manufacturers. Government regulations:

The Indian drug price regulator, the National Pharmaceutical Pricing Authority (NPPA) early in the year had invoked paragraph-19 of the Drug Price Control Order (DPCO), 2013, to fix trade margins at 30% for 42 non-scheduled anti-cancer medicines, which are sold under 463 different brands covering most of the anti-cancer prescriptions. These 42 cancer medicines accounted for 40-45% of the entire cancer treatment range available. These impacted the hospital margins more that Pharma companies. However, recently the government allowed a 50% hike in ceiling prices of 21 drugs to help companies producing these drugs maintain their supplies amid rising costs of Chinese raw materials.

Private hospitals expectations of a revision in package rates offered under the Ayushman Bharat scheme introduced by the Modi government was also a disappointment as the government showed no such inclination.

Prescription for 2020: Most of the large Indian facilities went through inspection in 2019; giving the respite that regulatory stringency has peaked and should ideally start easing in 2020. It is a known fact and for that matter, past experience has shown that compliance issues sharply impact investor sentiments and hence we expect more positive than negative surprises in 2020. Besides this, the other key focus areas that the industry has chalked are:

Focus would be domestic formulations after the ray of light portrayed in 2HCY19 that grew by ~10%.

Generics market is facing pricing pressure, which however eased a bit in 2019, and so the focus and investments would be towards complex drugs like specialty and biosimilars.

Regulatory challenges would continue and hence companies need to work on the same.

Shift towards patient care and services, enhanced use of technology in delivering care and higher share in medical tourism would be the focus.

Indian government's thrust on universal healthcare through Ayushman Bharat and an estimated 140 million households expected to enter the middle class in the next decade not only increases the consumption of healthcare services but also has an impact on healthcare demand and a significant uptake in patient volumes.

Outlook 2020: The bullish outlook for the sector is also reflected in the forecast by rating agency ICRA, which has projected the Indian pharmaceutical industry to grow around 10-12% between FY19 and FY22 while maintaining a stable outlook on the sector. Although pricing pressure and cost headwinds would be a drag on the performance, overall with increasing spending, growing exports and better accessibility should lead to a good year forward. Concluding we feel that 2020 should not be dormant like the year that went by but definitely would have the positives play with a cautious outlook though going forward.

Year 2019: Was All About Compliance

Biocon and Mylan launch Trastuzumab Biosimilar, Ogivri in the US

Natco Pharma completes investments in OMRV Hospitals

DRL announced the launch of Bortezomib for Injection in the US market Shilpa Medicare gets EIR from USFDA Zydus files NDA for Saroglitazar Magnesium

Mankind Pharma launches Infertility drug

Mankind Pharma eyes acquisition of biotech firms, plans new launches

Cadila’s API facility in Gujarat received an EIR classified as NAI

DRL announces launch of Deferasirox Tablets in the US market

Abraxis dismisses patent infringement complaint against SPARC

Zydus launches affordable oral anti-diabetic tablet Vinglyn

Cipla’s associate Avenue Therapeutics announces submission of new drug application for IV Tramadol

Panacea Biotec launches generic diabetes treatment drug ViLACT in India

Biocon & Equillium Inc. expand exclusive licensing agreement for Itolizumab to include Australia and New Zealand

Sun Pharma’s Halol facility gets 8 USFDA observations

Granules India to divest entire stake in Chinese JV

Indoco receives EU-GMP from UK-MHRA for its sterile facility in Goa

JB Chemicals has been allowed to raise prices by 50% from ceiling price for several formulations

Cipla acquires brand, trademark for anti-diabetic drug Vysov in India

Lupin announces completion of Kyowa divestiture to Unison

Granules India clarifies absence of NDMA in Metformin Hydrochloride batches

SPARC acquires Bioprojet’s rights for Investigational Medicinal Product, SCD-044

Panacea Biotec receives USD24.32mn award of Pentavalent Vaccine from U.N. Agencies

Lupin launches Doxercalciferol Injection

Suven receives EIR from USFDA for its Pashamylaram facility

Zero observations for Cadila Healthcare manufacturing facility at Ahmedabad

Glenmark announces product approval for Ryaltris in Australia

Natco launches cut price versions of cancer drug Ibrutinib in India

Ipca Labs partners with MMV to co-develop novel antimalarial co-formulation

Glenmark recalls ranitidine tablets in US

Scheme of merger sanctioned between Strides Chemicals Private Limited and Solara Active Pharma Sciences Limited

Biocon incorporated a wholly owned subsidiary Biocon Biosphere

Cadila Healthcare calls reports of divestment speculative

Dr. Reddy's Laboratories announces the launch of Sodium Nitroprusside Injection in the US market

Alkem Laboratories acquires assets related to Dronabinol API from AbbVie Inc.

Central drugs regulator asks states, UTs to stop online sale of medicines

Proposed cap on trade margins will not hurt Pharma companies: Fitch

E-Pharma startups ‘sensitive’ to data Bill definition

Pharma companies seek hike in drug rates under price control

Drug cos under NPPA lens for self-exemption from price cap

Novartis plans giveaway of world's most expensive drug

Industry

Company

Global

News for the Month

Source: Media Reports and Company Press Releases

Company API Strengths Indications Brand (Company) Mkt Size

Caplin Point Sodium Nitroprusside Injection

50mg/2ml (25mg/ml) vial

Indicated for the immediate reduction of blood pressure of adult

and pediatric patients in hypertensive crises

Nitropress (Hospira Worldwide, Inc.)

USD8mn

Lupin Mycophenolic Acid DR tablets

180/360mg Indicated for Prophylaxis of organ rejection in adult patients receiving

kidney transplants

Myfortic (Novartis Pharmaceuticals

Corporation)

USD174mn

Lupin Betamethasone Dipropionate

Ointment USP

0.05% Indicated for the relief of the inflammatory and pruritic

manifestations of corticosteroid-responsive

dermatoses in patients 13 years of age and older

Diprolene (Merck Sharp and Dohme Corp.)

USD22mn

Granules India Loratadine Tablets 10mg OTC Used to treat allergies such as itching, runny nose, watery eyes,

etc.

Claritin Tablets (Bayer HealthCare LLC.)

USD60mn (2017)

Alembic Pharma

Travoprost Ophthalmic Solution

0.004% Indicated for the reduction of elevated intraocular pressure in

patients with open angle glaucoma or ocular hypertension

Travatan Ophthalmic Solution (Alcon

Pharmaceuticals Ltd)

-

Indoco Remedies

Febuxostat Tablets 40/80mg Used for the treatment of gout caused by excessive levels of uric acid in the blood (Hyperuricemia)

Uloric Tablets (Takeda Pharmaceuticals Inc.)

USD500mn

Final ANDA Approvals:

Source: Media Reports and Company Press Releases

Company API Strengths Indications Brand (Company) Mkt Size

Cadila Lorcaserin Hydrochloride

Tablets

10mg Indicated to treat obesity Belviq Tablets (Arena Pharmaceuticals)

-

Strides Pharma Diclofenac Potassium

Softgel Capsules

25mg Used to treat muscle aches, backaches, dental pain, menstrual

cramps, and sports injuries

Zipsor Capsules (Assertio Therapeutics, Inc.)

USD30mn

Tentative ANDA Approvals:

Source: Media Reports and Company Press Releases

BSE Health Care Index Price Performance

Companies

Price

Chg (%)

1 M 6 M 12 M

Aarti Drugs Ltd 579 11.3 9.0 0.6

Abbott India Ltd 13073 3.9 47.0 73.9

Ajanta Pharma Ltd 975 -2.5 2.0 -17.8

Alembic Ltd 60 13.5 37.0 25.1

Alembic Pharmaceuticals Ltd 571 3.4 12.8 -4.4

Alkem Laboratories Ltd 2014 -0.6 20.7 3.4

Apollo Hospitals Enterprise Ltd 1442 0.1 6.1 14.5

AstraZeneca Pharma India 2623 -0.9 23.2 80.7

Aurobindo Pharma Ltd 457 1.6 -24.8 -37.5

Biocon Ltd 294 4.3 17.4 -53.3

Bliss GVS Pharma Ltd 151 5.1 -2.2 -9.1

Cadila Healthcare Ltd 254 -0.1 5.1 -26.9

Caplin Point Laboratories Ltd 301 -4.2 -33.5 -21.2

Cipla Ltd 478 2.5 -13.4 -8.0

Divi's Laboratories Ltd 1846 3.3 15.6 24.6

Dr Reddy's Laboratories Ltd 2877 -1.2 12.8 9.9

Dr. Lal PathLabs Ltd 1493 -4.9 39.7 63.5

Eris Lifesciences Ltd 474 2.9 -6.9 -30.7

FDC Ltd 212 10.6 13.3 22.8

Fortis Healthcare Ltd 132 -4.8 1.3 -5.9

GSK Pharmaceuticals Ltd 1608 -4.1 34.1 6.4

Glenmark Pharmaceuticals Ltd 348 2.9 -21.5 -49.8

Granules India Ltd 123 -3.7 27.3 37.3

Gufic Biosciences Ltd 61 -10.8 -19.4 -34.6

HealthCare Global Enterprises Ltd 104 -1.9 -32.7 -47.2

Hester Biosciences Ltd 1441 -8.2 -21.0 27.8

Hikal Ltd 114 1.8 -32.2 -26.9

Indoco Remedies Ltd 192 17.9 17.9 -12.0

Indraprastha Medical Corp. Ltd 40 -4.1 3.4 1.2

IOL Chemicals and Pharma Ltd 174 0.3 -17.0 4.7

IPCA Laboratories Ltd 1135 -0.8 23.7 41.6

J.B. Chemicals & Pharma Ltd 426 7.5 16.9 39.0

Jubilant Life Sciences Ltd 537 5.3 5.0 -24.4

Kopran Ltd 31 -9.4 -16.5 -19.9

BSE Health Care Index Price Performance

Companies

Price

Chg (%)

1 M 6 M 12 M

Laurus Labs Ltd 360 2.6 6.8 -5.3

Lincoln Pharmaceuticals Ltd 205 19.2 25.9 -9.1

Lupin Ltd 765 -4.4 1.3 -9.5

Mangalam Drugs and Organics Ltd 28 -3.6 -7.5 -61.8

Marksans Pharma Ltd 17 14.5 -18.7 -39.9

Medicamen Biotech Ltd 342 11.3 -19.2 -21.2

Merck Ltd 4352 0.3 6.0 41.1

Morepen Laboratories Ltd 16 -1.9 -14.3 -29.8

Narayana Hrudayalaya Ltd 307 3.9 28.0 57.1

Natco Pharma Ltd 593 -0.1 11.0 -12.9

Nectar Lifesciences Ltd 12 -5.1 -18.6 -41.0

Neuland Laboratories Ltd 419 -8.0 -19.9 -8.8

Novartis India Ltd 668 0.4 0.4 -7.3

Opto Circuits India Ltd 3 -2.4 -40.5 -68.4

Panacea Biotec Ltd 132 5.5 -15.9 -17.5

Pfizer Ltd (India) 4224 1.7 25.9 48.3

Piramal Enterprises Ltd 1524 -15.9 -21.7 -36.0

Poly Medicure Ltd 218 6.3 17.0 -1.5

RPG Life Sciences Ltd 310 15.5 24.1 30.2

Sanofi India Ltd 7016 -0.7 24.0 10.4

Shalby Ltd 93 -15.4 -16.4 -36.8

Shilpa Medicare Ltd 282 -4.9 -18.1 -26.6

SMS Pharmaceuticals Ltd 41 1.4 -24.9 -39.9

Strides Shasun Ltd 362 -6.5 -9.2 -21.5

SPARC Ltd 156 -3.6 34.6 -16.8

Sun Pharmaceutical Industries Ltd 433 -3.8 7.9 0.4

Suven Life Sciences Ltd 307 -2.6 13.2 34.9

Syngene International Ltd 322 1.4 -3.6 -42.7

Thyrocare Technologies Ltd 547 -0.4 16.0 3.7

Torrent Pharmaceuticals Ltd 1847 -2.6 19.3 4.3

Unichem Laboratories Ltd 160 -2.8 -6.5 -16.4

Vimta Labs Ltd 93 -5.8 -46.4 -70.5

Vivimed Labs Ltd 12 -3.0 -23.0 -66.4

Wockhardt Ltd 234 -9.3 -37.6 -55.4

Source: BSE website; All prices are as on 31st December 2019

Source: BSE website; All prices are as on 31st December 2019

NIFTY PHARMA COMPANIES

Company

Price (Rs)

Mcap (Rsmn)

Chg (%)

1 M 6 M 12 M

Aurobindo Pharma Ltd. 457 267891 1.55 -24.8 -37.5

Biocon Ltd. 294 352680 4.3 17.4 -53.3

Cadila Healthcare Ltd. 254 260235 -0.1 5.1 -26.9

Cipla Ltd. 478 385382 2.5 -13.4 -8.0

Divi's Laboratories Ltd. 1846 490082 3.3 15.6 24.6

Dr. Reddy's Laboratories Ltd. 2877 410240 -1.2 12.8 9.9

Glenmark Pharmaceuticals Ltd. 348 98053 2.9 -21.5 -49.8

Lupin Ltd. 765 346230 -4.4 1.3 -9.5

Piramal Enterprises Ltd. 1524 302943 -15.9 -21.7 -36.0

Sun Pharmaceutical Industries Ltd. 433 1037712 -3.8 7.9 0.4

Source: NSE website, Company Research; All prices are as on 31st December 2019

Nifty Pharma Index Vs. Nifty Index

Source: NSE website

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