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Cipla Ltd’s shares have so far gained more than 20% in FY22, a sign that investors are keeping faith in its growth prospects.

Indeed, the company is expected to witness a strong revival in portfolios that were overshadowed by the surge in covid-related drugs so far.

Even as the boost from covid-19 drugs wanes, Cipla’s acute segment is expected to come to the fore and support growth. The company’s domestic portfolio comprises both chronic and acute products. Chronic segment contributions have remained strong during the past quarters.

Healthy pace
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Healthy pace

As such, the rising pace of pharma market growth bodes well for companies such as Cipla that see strong domestic market contributions. Domestic market share in overall revenues is about 40% for Cipla.

Yet another factor supporting growth is the rebound in sales of respiratory therapy. Cipla is known for its strong domestic respiratory franchisee. In addition, other therapies such as analgesics, anti-infectives, gynaecology have shown a quick revival as well, making the outlook for domestic growth appealing. The trailing 12-month domestic sales growth for Cipla stood at 19.8% till August, data shows.

In fact, growth prospects for the respiratory portfolio remain strong even in the US market. The company’s launch of Albuterol inhaler generics in the US has helped sales there despite pricing pressures. On the other hand, many peers such as Lupin and Cadila have seen significant pressure on their US sales performance in the past quarters.

Cipla is seeing market share gains in Albuterol generics. A mid-September report by analysts at Nirmal Bang Institutional Equities on the prescription trends in the US market suggested that Cipla has been able to gain 300 basis points market share on a sequential basis. The Street is also optimistic about more product launches as the respiratory portfolio unfolds.

Cipla is expecting approval for generic Advair in the US market, which is believed to be a much bigger and meaningful opportunity. Besides respiratory products, Cipla continues to work on peptide-based products to build and enhance its niche pipeline for the US market. Be that as it may, most of the positives seem to be baked into its valuations. With recent gains, the stock trades at about 27 times FY22 earnings estimates, leaving little room for further upside.

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