Sinewave Securities

The healthcare sector consists of all businesses involved in the provision and coordination of medical and related goods and services. With such huge base it packs together a number of companies from API players to generic drug makers to hospitals. Here an overview of the sector is provided using numbers, facts and estimated growth rates. Drug Segment Global-1.3tn$ @ CAGR 4.5% 2025E -Formulation-85% i.e. $1.1tn and rest 15% API and bulk drugs-$200bn -US=$500bn US Pharma Chain Fastest growing therapies : The domestic formulations business of pharmaceutical companies in India are pure cash cow businesses. This bucket has the highest ROCE, lowest working capital requirement & least capital intensive, generating ~11% of Revenue as free cash over the last 10 years. Given that the Indian Pharmaceutical market is a Branded generic market, the brands of companies are essentially their greatest competitive advantage. This is reflected in the fact that the top 25 pharma...

APIs and China Play-  On an average, prices of APIs imported from China have gone up by 20-30% from January 2020 till date thus leading to 4-5% decline in profit margin of drug makers, said a drug industry representative. API Mkt –55bn$ in 2020 The prices of anti-infective APIs such as tinidazole, amoxicillin, ceftriaxone, clav avicel, diclofenac sodium, ofloxacin, clav syloid, clotrimazole, ciprofloxacin as well as anti-inflammatory API-dexamethasone sodium have hiked by 24% to 38% from January to April this year. The prices of erythromycin thiocyanate which is the raw material for preparing erythromycin derivative products, such as azithromycin, clarithromycin and roxithromycin have spiked by 20% from pre-COVID period till now. Besides them, the prices of four APIs-- paracetamol, ornidazole, azithromycin and nimesulide have risen from 62% to 189% from January to April. The price of paracetamol has increased from Rs. 262 a kg in January to Rs. 425 per kg in April. Para amino p...