Under pressure: Chronic therapy needed for an acute condition

Top pharma companies will continue to face severe pricing pressure and regulatory overhang in FY18. Steps taken to rectify this situation, including launches of complex and niche drugs, will take at least a year to fructify.

• Failure to adequately monetise products and higher-than-expected base portfolio price erosion are key worries
• Regulatory overhang given observations by the US FDA for its Goa facility
• In addition to sectoral headwinds, high debt and weak cash flows are other pain points 
• Weak Latam, India and other semi-regulated market performance adding to the problems
• Despite strong forecast, the stock, which is down 39 per cent from its peak, will remain under pressure
• Stock is trading at 14 times FY19 earnings estimates and discount to peers unlikely to narrow soon