It is unlikely for Zydus Cadila to repeat US feat this year, say analysts

Analysts doubt if Cadila Healthcare (Zydus Cadila) will be able to replicate the 43 new product launches in the US it did in 2018-19. Also, they think, though high in terms of volume, the new US launches were not big enough to make significant dents in the market.

“It is unlikely for the firm to repeat the feat this year. Last year, the company had said it was going to launch 50 products, against which it launched 43. However, most of these products are smaller ones,” said an analyst, on condition of anonymity. 

Cadila’s annual report says FY19 was similar to FY18, which saw 77 new product approvals. The 43 new products in FY19, it had said, was highest number so launched by it in the US in a single year till date.

Analysts doubt if other Indian firms in the segment will do much better in the formulations business in the US. “I do not think FY20 will match expectations of many Indian pharma companies. As far as Cadila Healthcare is concerned, irrespective of the launches, how many of the products will go on to garner market share will be questionable. I don’t think the market is big enough now. Some of the products might turn out to be influential but the rest of them might not,” Surajit Pal, research analyst at brokerage Prabhudas Lilladher, told Business Standard.

Cadila’s US formulations business was the largest contributor at Rs 6,279 crore to its consolidated revenue of 13,166 crore; it grew 8 per cent. The India formulations business, second largest contributor, saw sales of Rs 3,534 crore during the year, up six per cent. It had launched 53 products in this country, including line extensions, of which eight were first-in-India ones. 

Analysts are also wary on the company’s Moraiya plant in Ahmedabad that makes drugs for the US market. “The FDA inspected the facility from April 22 to May 3, 2019, and then issued 14 observations. These don’t include any repeat observations or data integrity-related observations. The firm has responded, with the corrective and preventive action plan it proposes to implement to resolve these observations,” the firm stated in its annual report.

“Given the observations Moraiya has received in recent times, these many products getting approved this year is unlikely. There are not many drugs left in formulations in the US that can get revenue. Rather, what are left are in biologics, insulin and gene therapy, among others,” said an analyst.