The research services business also holds promise, given the pricing pressure and competition being faced by pharma majors, which increases the need for cost controls and outsourcing.
Analysts said biosimilar launches in the developed and the emerging markets, along with Syngene, are the key levers.
The stock, however, has seen a 28 per cent correction since its highs this year. Analysts attribute the weakness due to the regulatory overhang faced by the sector as well as rich valuations the stock is trading at. The increased investments and R&D cost are likely to weigh on margins and, in turn, earnings growth, said analysts at Edelweiss Research. Analysts at Axis Securities say growth will continue but margins will stabilize in FY20 before expanding again in FY21. However, many others feel that after the launches in the second half of FY20, margins will expand significantly. Hence, corrections offer an opportunity for investors with a long-term investment horizon.