Alembic Pharmaceuticals is a value buy

India is the largest provider of generic drugs globally, with the pharmaceutical sector industry supplying over 50% of the global demand for various vaccines. With a large pool of Indian scientists and engineers, the country holds an important position in the global pharmaceutical sector. Presently over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immunodeficiency Syndrome) are supplied by Indian pharmaceutical firms. The Indian pharmaceutical sector, which was valued at around US$33 billion till last year is expected to expand at a CAGR of over 20% and touch US$50 billion in the next few years. Likewise, the Indian pharmaceutical exports currently at around US$27 billion are expected to reach US$20 billion by 2020. Indian pharmaceutical companies have been in the forefront of receiving ANDA (Abbreviated New Drug Applications) approvals from the US Food and Drug Administration (FDA) every year, thereby accounting for around 30% by volume and about 10% by value of the US generics market. The government has done its bit by amending the existing Foreign Direct Investment Policy for the pharmaceutical sector by allowing FDI up to 100% under the automatic route for manufacturing of medical devices. The government has also undertaken many initiatives and programmes to support and promote Indian pharmaceuticals in a big way. The National Health Protection Scheme announced in the Union Budget 2018-19 is the largest government funded healthcare programme in the world, which is expected to benefit 100 million poor families in the country by providing a cover of up to Rs 5 lakh per family, per year, for secondary and tertiary care hospitalisation. The government has also unveiled PharmaVision 2020, which is aimed at making the country a global leader in end-to-end drug manufacturing. Alembic Pharmaceuticals Ltd is a vertically integrated research and development pharmaceutical company since 1907 and is one of the leaders in branded generics in the country. The company reported a 30% rise in net profit of Rs 169.83 crore for the quarter ended December 2018, while the consolidated revenue stood at Rs 1,018 crore as against Rs 840 crore for the corresponding quarter of last fiscal. This was mainly on account of robust sales in the United States, which grew by over 40% to Rs 308 crore as against Rs 218 crore for the year ago period. The Alembic Pharmaceuticals stock currently quoting at Rs 565 is a value buy for a price appreciation of 23% in the next one year.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.