This Pharma Stock Can Gain Up To 21% In The Short Term

Broking firm, Motilal Oswal has recommended buying the stock of Gland Pharma for an upisde of nearly 21% from the current levels.

Products facing a shortage in the US markets

According to Motilal Oswal, as many as eleven products of Gland Pharma, with a combined market size of USD400m, are facing a shortage in the US. There are certain drugs where more than five of its peers have ANDA approvals. Despite that, the drugs are under shortage due to increased demand/reduced supply, or manufacturing constraints/discontinuation by existing companies.

Big opportunities for Gland Pharma due to shortage

From the total injectables under shortage at the industry level, Gland Pharma and ARBP are among the Indian companies that have the highest number of drugs as part of their respective portfolio.

"Even if drugs under shortage provide business opportunities for companies like SUNP/LPC/DRRD there is limited scope for supplies due to either restricted quantities of API availability or inadequate inventory," Motilal Oswal has said in its report.

Valuation and view on Gland Pharma

Motilal Oswal expects 27% earnings CAGR over FY22-24, led by 16% sales CAGR in its core markets, 23% in India, and 43% in RoW - supported by a 200bp margin expansion over FY22-24. "We estimate Rs 3 billion in Biologics sales in FY24. We value Gland Pharma at 35 times 12-month forward P/E to arrive at our target price of Rs 4,040. We remain positive given: a) its niche product pipeline in injectables, b) volume gains in existing products, c) wider market operations for its portfolio, d) a strong cash cushion for inorganic growth, and e) consistent compliance," the brokerage has said.

What does Gland Pharma do?

Gland Pharma has grown over the years from a contract manufacturer of small volume liquid parenteral products, to become one of the largest and fastest growing injectable-focused companies, with a global footprint across 60 countries, including the United States, Europe, Canada, Australia, India and other markets. It operates primarily under a business to business (B2B) model and have an excellent track record in the development, manufacturing and marketing of complex injectables. This presence across the value chain has helped us witness exponential growth. The company is promoted by Shanghai Fosun Pharma, a global pharmaceutical major.