Hold Biocon; target of Rs 800: ICICI Direct

The small molecules segment accounts for 42% of the turnover and comprises APIs like statins, immune suppressants and specialty APIs and also includes generic formulations business. This vertical is witnessing pricing pressure in some products. The company is exploring fewer opportunities but with higher profitability in this segment such as moving into formulations and filing own ANDAs, 505 (b) (2) filings, etc. It has already filed seven or eight ANDAs cumulatively. These include complex generics and injectables. We expect the small molecules segment to grow at a CAGR of 13.5% to Rs 1787 crore in FY16-18E.   

Encouraging developments on biosimilars front in the last six months have hogged the limelight especially approval and launch of Glargine in Japan and presentation of Trastuzumab data to ASCO. Launches in emerging markets are also seeing momentum. These developments are testimony to Biocon’s progress. With the Malaysian facility getting ready for global filings, we believe the future bodes well for the company on the biosimilars front. It will also provide an extra lever for growth besides Syngene and branded formulations. Our SOTP target is now Rs 800.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.