Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Are injectables lucrative for Indian Pharma? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Are injectables lucrative for Indian Pharma?

Dec 19, 2012

As the patent cliff nears, the generic companies are working out ways to fuel their top lines. In this, the injectable market has been an area of interest for various companies. Besides Indian generic companies, global generic companies too are entering this segment. For example, Novartis' generic arm Sandoz acquiring Ebewe, which is an injectable focused company.

Opportunity in the injectable market

The overall size of the injectable market during 2009 was approx US$ 200 bn. This has grown further by 10% to US$ 220 bn in 2011 with generic penetration being 15%. In the injectable group, the segments of biologics and oncology are relatively more lucrative offering higher upside.

US, being the world's largest pharmaceutical industry, also accounts for the largest chunk of the overall injectable space. During 2011, US had 38% share in the injectable market of which generic penetration was at US$ 5 bn. It is expected that by 2015 roughly 75 products worth US$ 16 bn could face the entry of generics for the first time. It is also estimated that US generic injectable sales would grow at a CAGR of 10% in the period 2012-2015.

Source: Sandoz

How do injectable drugs differ from the others?

The current strict compliance with respect to manufacturing facilities has resulted in a limited number of injectable manufacturing facilities globally. Due to this, the US too has witnessed strong shortage of injectable products on the back of warning letters issued to many companies and recall of drugs. The number of injectables falling under shortage list increased from 39 to 139 in 2011. By nature manufacturing injectable drugs is complex involving long lead time.

Historically, the generic approval per injectable has been as low as one. Further, large part of the injectables segment has faced limited competition i.e. around 86% of the products have less than 5 players. This is because majority of the injectables further fall under niche segments like biosimilars and oncology. Thus, overall owing to high entry barriers with longer manufacturing and approval times and limited competition, this segment offers lucrative margins. All these aspects have increased consolidation, some of major ones being - Hospira acquiring Orchid's injectable segment, Novartis acquiring Ebewe and Mylan acquiring Bioniche among others.

Where do Indian companies stand in this space?

Among the Indian companies, Cadila has entered into a JV with Hospira for oncology injectables. The company has widened its portfolio and will be incurring capex of US$ 20 m for new products. On the other hand Strides Arcolab, has been a distinctively injectable focused player. The company too has entered into JV and has one division which focuses only on injectable shortages that take place in the US. Sun Pharma too has launched some injectables in the oncology space. Dr Reddy's acquisition of Octoplus Pharma has also been done to tap specialty injectables. Claris Life Science is one more injectable focused company, which recently entered into JV with Otsuka. Biocon has entered into a partnership with Mylan for manufacturing of drugs in the biosimilar segment.

Our view...

Given the intense competition and price erosion evident in the US generics segment, Indian generics players have been increasingly focusing on niche segments and Para IV opportunities to bolster revenues and profits from this market. And the injectables segment is one such niche area. Thus, those companies having injectables as part of their portfolios have the potential to improve margins and report decent growth. However, there is a flipside too. Owing to the complexities in manufacturing in this space, the norms are quite strict when it comes to compliance with good manufacturing practices. Case in point is Hospira's. The company too derived considerable revenues from injectables. But a warning letter from the USFDA negatively impacted the company. Overall, a right mix of injectable products in the portfolio, backed by appropriate manufacturing activities will add value to the overall growth of companies.

Bhavita Nagrani

Bhavita Nagrani (Research Analyst) is a Chartered Financial Analyst (ICFAI) with nearly six years of experience in the field of equity research. She has a deep understanding of the global as well as the domestic Healthcare industry and keenly tracks the developments therein. When it comes to stock investing, she is a strong advocate of the bottom-up approach to stock picking and has a remarkable ability to discern nuances in the business models of companies belonging to the same industry. Bhavita is the contributor to our large cap franchise, StockSelect.

Equitymaster requests your view! Post a comment on "Are injectables lucrative for Indian Pharma?". Click here!


More Views on News

SUN PHARMA Announces Quarterly Results (3QFY19); Net Profit Up 265.5% (Quarterly Result Update)

Feb 13, 2019 | Updated on Feb 13, 2019

For the quarter ended December 2018, SUN PHARMA has posted a net profit of Rs 15 bn (up 265.5% YoY). Sales on the other hand came in at Rs 77 bn (up 16.3% YoY). Read on for a complete analysis of SUN PHARMA's quarterly results.

SUN PHARMA 2017-18 Annual Report Analysis (Annual Result Update)

Dec 20, 2018 | Updated on Dec 20, 2018

Here's an analysis of the annual report of SUN PHARMA for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of SUN PHARMA. Also includes updates on the valuation of SUN PHARMA.

SUN PHARMA Announces Quarterly Results (2QFY19); Net Profit Down 110.7% (Quarterly Result Update)

Nov 14, 2018 | Updated on Nov 14, 2018

For the quarter ended September 2018, SUN PHARMA has posted a net profit of Rs 1 bn (down 110.7% YoY). Sales on the other hand came in at Rs 69 bn (up 4.3% YoY). Read on for a complete analysis of SUN PHARMA's quarterly results.

Sun Pharma: Tough US Scenario Continues to Hit Business (Quarterly Results Update - Detailed)

Nov 20, 2017

The company's India business recovers but the pricing pressure and USFDA issues continue to mar the US revenues.

Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

Aug 14, 2017

A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

More Views on News

Most Popular

Stocks that Could Be Out of Reach Post Elections(The 5 Minute Wrapup)

Apr 9, 2019

It's a matter of time before the stocks catch the fancy of the markets and big investors.

3 Indian Stocks with Amazon-Like Potential(Profit Hunter)

Apr 10, 2019

We have identified 3 stocks with huge wealth building potential which meet our 'Click of a Button' criteria.

A 90% Chance of Auto Stocks Moving Up This April(Profit Hunter)

Apr 5, 2019

The Auto index ended on a positive note in the month of April in 9 out of last 10 years. This Auto stock is best placed to benefit from the upswing in this sector.

This Company is Making a Big Comeback and You Can Now Profit from Its Example(The 5 Minute Wrapup)

Apr 10, 2019

How Dell got its mojo back.

This is Why the Stock of Jubilant FoodWorks Went Up 1,160%(The 5 Minute Wrapup)

Apr 12, 2019

This critical business strategy has enabled companies to scale their operations faster.


Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms


Apr 18, 2019 (Close)


  • Track your investment in SUN PHARMA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks