Zydus Lifesciences: Robust outlook for both US and India biz

15 Feb 2024 , 03:21 PM

Analysts of IIFL Capital Services hosted Zydus Lifesciences at IIFL’s Investor Conference in Mumbai. Zydus expects to grow its US business in FY25 despite incremental generic competition in Asacol, offset by targeted 15-20 launches p.a. and scale-up in Revlimid. However, in the medium term, Zydus has 1-2 sizeable opportunities in the US every year till 2027 to support growth. Zydus is focusing on consolidating brands and focusing on prescription led growth in India. Mgmt has identified 20-25 focus brands and key emerging therapies like Onco, Renal, Gynaec, Resp. etc. and has also added 600-700 MRs (total MR strength of 7.5K) which would enable it to grow its India business in-line or slightly higher than IPM growth. 

US business to grow in FY25 despite Asacol competition: 

Asacol might see competition from 1-2 generic players, however with 15-20 launches p.a. and scale-up in Revlimid to support growth in US business. Also, the company has 1-2 sizeable opportunities in the US every year till 2027 to support growth. The economics between Zydus and Synthon for Ibrance (FTF launch likely in Mar’27) is not disclosed, but Zydus would have paid an upfront payment to the partner. Vascepa is to be launched in Q4FY24 as Zydus has secured the API supplies however the opportunity is reduced with incremental competition. Sitagliptin 505(b)2 opportunity will scale-up gradually in FY25, while transdermals could become a USD50- 60mn portfolio for Zydus over the next 2-3 years. 

Acquired LiqMeds, a niche liquid orals platform: 

Zydus acquired LiqMeds for GBP68mn and there are additional payments in tranches over the next 3 years, depending on achievement of certain milestones. 25-30 products of LiqMeds have been out-licensed and these initial set of products will start getting launched soon. It also offers Zydus a platform to launch its own oral liquid products through LiqMeds. The payback period of the acquisition will be around 6-7 years. 

Focus on building brands in India rather than doing a larger no. of launches: 

Mgmt is focussing on emerging therapies like Oncology, Renal, Gynaec, Resp, etc. and has identified 20-25 focus brands to drive growth. The incentives of field force are also aligned with these brands which should aid in higher productivity. The company has added 600-700 MRs in the last 6 months to support growth for India business and have 7.5K MRs (total field force strength of 9K) currently covering 26 divisions.