Pharma Sector Check - Revlimid Drives U.S. Revenues; Ex-Covid, Domestic Revenues Were Strong: Nirmal Bang

Nirmal Bang Report

Q2 FY23 performance by our pharma universe (17 stocks) was mainly driven by Revlimid launched in the U.S. market and U.S. dollar appreciation versus Indian rupee (by 7% YoY), which was partially offset by continued pricing pressure in the U.S., high base of Covid in domestic formulations and cost inflation.

Our universe revenue grew by 8.6% YoY/7.4% QoQ. U.S. market revenue of selected companies from coverage in U.S. dollar terms grew by 12.4% YoY, but, excluding Revlimid, it grew by merely 1.8% YoY.

Most of the midcap companies indicated high teens price erosion in the U.S. base business.

In domestic formulations, excluding Covid opportunities, almost all coverage companies grew in double digits, driven by price hikes and volume gains, partially supported by seasonality benefit.

However, margins were under pressure in Q2 FY23 due to cost inflation, U.S. price erosion and adverse mix.

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