Sinewave Securities

Pharma sector is a mammoth among the healthcare spectrum with the presence of a number of players from generic to non generic, formulations to APIs, CDMO to CRO, biologics and biosimilars. Each sector has a few players competing among themselves to get a chunk in growing markets. I have tried to cover the basics about healthcare sector in   https://www.sinewavesecurities.com/2022/06/healthcare-mamoth-among-moles.html Do give it a read for the basics.   Here I have taken examples of few companies, study their financials and business model and try to enhance “circle of competence”. DRL -25/25/25 ! Dr. Reddy's Laboratories Ltd is a leading India-based pharamceutical company which offers a portfolio of products and services, including Active Pharmaceutical Ingredients (APIs), Custom Pharmaceutical services (CPS), generics, biosimilars and differentiated formulations. Global Generics Segment (~80% of revenues): This is the main business of the company wherein it off...

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...