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Alkem Laboratories will take a maximum hit from the government’s decision to ban 328 combination drugs, says Nomura.
The Ministry of Health and Family Welfare has prohibited the manufacture, sale or distribution of 328 fixed dose combinations for human use with immediate effect. It has also restricted the manufacture, sale or distribution of six FDCs, subject to certain conditions.
The brokerage says about 2-3 per cent of Alkem's domestic pharma sales are likely to be impacted by the ban. These 328 drugs have a market size of Rs 1,500 crore ($209.02 million), representing about 1.3 per cent of the overall market.
Overall impact will be limited as most large companies have discontinued the brands or have made necessary changes and reformulated. Impact on IPCA Laboratories Ltd and Lupin Ltd is expected to be less than 2 per cent of their domestic sales; the impact will be less than 3 per cent and 2 per cent, respectively, on FY20 earnings estimates, the brokearge says.
As of last close, Alkem stock had declined 3.3 per cent, Lupin gained 8.4 per cent and IPCA climbed 29 per cent this year. ($1 = 71.7625 Indian rupees)
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