Revlimid is shaping up to be a meaningfully large opportunity for India’s pharma universe: Nithya Balasubramanian

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There are some concerns with regard to the pharma sector, largely pertaining to the US market. Generic pricing deflation has been quite high in the last year. Investors are still cautious, and since pharma is a defensive sector, and despite all the macro headwinds, this sector will show resilience, Sanford Bernstein’s Nithya Balasubramanian told CNBC-TV18.

However, Balasubramanian is more inclined toward stocks that are active in the US market over locally focused names.

“I am a bit more positive on the US market for the rest of the year. I believe that generic pricing will look better,” Balasubramanian said. She expects a 10-11 percent deflation in the base pricing from the last year.

Pointing out that pharma brands are losing exclusivity, Balasubramanian said it creates more opportunities for generic brands to launch new products. Myeloma treatment Revlimid is shaping up to be a meaningfully large opportunity for the likes of Dr Reddy’s and Cipla, she added.

Even though growth in the last quarter was subdued, data over the last few months shows that it is recovering to near-double-digits, Balasubramanian said. “We are expecting a 9-11 percent growth in the Indian pharma market,” she said.

Cipla has created a buzz in the short and medium run, with multiple tailwinds supporting the company, according to Balasubramanian. Additionally, it has a 45 percent exposure to the Indian market. The company has 10 differentiated assets and has many short-term goals materialising.

Natco Pharma was the first in India to launch a generic version of Revlimid, which are lenalidomide capsules used to treat blood cancer. Dr Reddy’s is set to follow suit.

However, Natco and Dr Reddy’s can only sell a limited quantity of the Revlimid generic, governed as they are by respective contracts. Therefore, the price erosion is going to be nominal compared to a fully competitive market.