BackHere are top stock picks in CRAMS, API space in pharma sector by Motilal Oswal
The brokerage believes Indian CRAMS players are uniquely positioned to outperform the industry in this segment
PremiumWith the ease of access to capital for emerging pharma companies, there is a surge in biopharma companies focusing on R&D and outsourcing manufacturing at the research/commercial level. This, along with cost consciousness of larger pharma companies, is providing a fillip to this segment. Motilal Oswal believes that Indian contract research and manufacturing services (CRAMS) players are uniquely positioned to outperform the industry in this segment.
The brokerage firm believes Divis Laboratories, Gland Pharma, Sun Pharma, and Laurus Labs are suitably positioned in this framework for a superior business trajectory. Divis/Gland is expected to continue to outperform among Contract Development and Manufacturing Organization (CDMO) players.
“CRAMS/custom synthesis remains the fastest growing opportunity. Based on its relationships and execution track record, Divis is best placed among Indian Pharma companies to outshine in this space," Motilal Oswal said in a note.
It expects Sun Pharma to turn the tide in US sales with its specialty business, albeit with a longer gestation period. Further, the brokerage expects Laurus to outperform the industry in APIs (active pharmaceutical ingredients) and formulations in the near term, with biologics/fermentation CDMOs acting as a key trigger over the next 3-5 years.
"With the Aurore Life Sciences (ALS) acquisition, SOLARA (Solara Active Pharma) is embarking on its next journey in both Generic APIs as well as CDMO. While backward integration in Ibuprofen gives it a distinct advantage to weather the pricing pressure, the ALS acquisition accelerates its CRAMS aspirations, with an upside from synergies and new inorganic opportunities,'' the note added.
Motilal Oswal believes that Indian pharma companies are looking at a sustainable growth opportunity in the coming decade as the lack of differentiation in generics has chipped away at margins due to increased competition.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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