We expect the US market to remain the largest market for generics. Indian companies are looking at products with high technological barriers and limited competition to generate steady cash-flows.

On the domestic front, we expect companies with higher proportion of chronic and lifestyle product sales, better supply chain management and higher Revenue per sales force to lead the pack.

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We continue to favour the CRAMS Segment. Currently, however, the Segment is witnessing near-term hiccups by way of inventory de-stocking at the Innovator’s end, which is expected to last for few more quarters.

Over the longer term, we expect this space to witness secular growth. CROs with presence in multiple geographies and providing a full range of services will be the key differentiators.

We expect Out-licensing and Collaborative Research to be adopted by the Indian companies engaged in NCE Research given the substantial financial requirement and low success rate.

In the Biopharma space, though EU, Japan and other developed markets have approved legislation for biosimilars, regulatory clarity in the US market would be a major catalyst for further investments in the Segment.

Our preferred picks in the Pharma Sector are Cadila Healthcare, Lupin, Piramal Healthcare and Ipca Labs.