In the US market, while thyroid treatment generics, responsible for sales growth earlier, are facing competitive pressures, analysts see growth momentum driven by other product launches. Cipla
has guided for one high-value launch per quarter in the US starting the March 2020 quarter and analysts estimate a $10-15-million opportunity for each drug and profit margins of 70 per cent. Analysts at UBS say that Cipla's strategy of focusing on niche segments could work well. They expect an improvement in gross margins over the next two years.
Cipla already has exclusivity in the supply of inputs for three generic products with Teva in 2020-21. In respiratory therapy, analysts expect the launch of generics of albuterol and Advair inhalers in FY21. Cipla received 12 observations for its Goa plant, which contributes 20-25 per cent to US sales. However, analysts say most of the products from this site have filings from alternative sites and all the respiratory filings are from the Indore facility, which has US FDA clearance. Hence, analysts see a limited impact if the regulatory issues escalate.
Target prices of Macquarie, UBS, Morgan Stanley range from Rs 550 to Rs 578, indicating 15-20 per cent upside for the stock, which trades at Rs 483.35.