Notes from the Reliance Pharma Conference Call

Attended the Reliance Pharma Conference Call where Sailesh Bhan, Fund Manager of Reliance Pharma Fund spoke on the Sector Outlook.

Key takeaways :

  • Pharma Sector consists of two plays-India domestics & US Generic Exports
  • India Domestics consists of India Generics,Diagnostics,Hospitals etc
  • Sees growth in India Domestics as fairly robust…can grow 15% p.a on a value basis
  • GST will impact India Domestics over a 2/3 Quarter Period
  • Doctors prescribing Generic Names vis-a-vis Brands may impact India Domestics but it is too early to tell the exact impact
  • The other category are companies whose sales are 60-65% US Generic market
  • Their sales and earnings have been badly hit due to three reasons
    • Very competitive pricing in US generic markets
    • FDA regulatory issues on their manufacturing plants
    • Lack of new launches due to point # 2
  • It will take at least 18-24 months for earnings to recover for these companies
  • These companies are using their super profits of the past to invest in R&D…some companies have 8-10% of sales invested in R&D
  • Valuations of the Sector have corrected significantly and the market is pricing in zero earnings growth
  • This sector is one of the most competitive sector out of India with exports to more than 100 countries and as such has a lot of promise
  • One may look at this sector from a 2/3 year horizon and do a SIP

2 replies on “Notes from the Reliance Pharma Conference Call”

Yes , some possible dealt in growth could get us restless in these time if great momentum !! Patience and Patients will help investors in the sector !!

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