Prabhudas Lilladher bullish on Sun Pharma, Lupin; maintains positive view on hospitals

Param Desai, Research Analyst at Prabhudas Lilladher, said the outlook for select pharma and hospital companies remains strong despite near-term challenges.On the pharmaceutical side, he noted that the impact of Revlimid will fade. “Quarter three or second half of the year onward, Revlimid will go down,” he said. While companies are investing in complex generics, biosimilars, and GLP opportunities, he said, these are unlikely to fully offset the decline. Within largecaps, Desai prefers Sun Pharma and Lupin. “Sun is largely the play on speciality pharma. Lupin doesn’t have any exposure to Revlimid, but they have an interesting US pipeline,” he explained. On the domestic side, he is positive on Torrent Pharma and Eris Lifesciences.

In hospitals, Desai highlighted the growing role of insurance in revenues. “Around 25 to 40% of their payer mix is coming from insurance… post COVID, this insurance mix has gone up,” he said, noting that volumes have also increased. He added that hospital efficiency and digital adoption have helped improve ARPOB (Average Revenue Per Occupied Bed), which has been growing 7-8% in recent years.

Also Read | India chemicals industry set to grow in pharma, agrochemicals, and advanced materials, says Kotak Mahindra AMCOn regulation, Desai said standardised pricing would be difficult to implement. “To have a standardised pricing, practically, it won’t be possible, given that the private market share in India is largely 60-65%,” he said.

He added that largecap pharma remains dependent on the US market, though non-US markets are gradually improving. Looking at hospitals, he expects expansion to drive growth. “From the next three to four-year perspective, most of these guys are adding 50% or 100% bed capacity… that will be largely the growth driver,” he said, adding that the brokerage has a positive stance on the hospital sector.

For the full interview, watch the accompanying video

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