By: InterMarket Securities Limited
Pharma Sector have returned +20.2% CYTD relative to Index returns of +6.9%CYTD on talks of select names obtaining Hep‐C generic manufacturing license coupled with anticipation of improved results during 3Q on volumetric uptick.
IMS Pharma Universe posted 3QCY15 earnings of PkR3.5bn, up by a massive 140%YoY, taking 9MCY15 earnings to PkR7.2bn (+69%YoY; ex‐FEROZ: +52%YoY). FEROZ remained in the limelight on its Hep‐C drug orders followed by SEARL and HINOON. GLAXO performance improved on one‐off with ABOT also failing to impress on the back of slow volumetric growth during the period.
Implementation of the Drug Policy’15 should become visible post Jul’16 which is largely positive for core pharmaceuticals, with prices frozen since 2012. As a result, premium Pharma valuations (21x P/E multiple vs. SENSEX 12m‐trailing P/E 30x) do appear to have some justification.