In Outlook Business’ third edition of The Outperformers, these are the companies that have managed to beat the market over a five-year period, creating significant value for their shareholders.
With Indian pharma companies facing pricing pressure in the US market, Natco Pharma has turned to other geographies. The company is now making deeper inroads into the domestic market and has strengthened its presence in Brazil and Canada. In 2017, Natco Pharma forayed into chronic therapeutic areas such as cardiology and diabetology in India. These segments are expected to scale up in the next two to three years.
While it looks to de-risk the business and reduces dependence on the US market, Natco Pharma’s performance over the past five years throws light on a well-crafted strategy, which made it an outperformer. The company’s PAT and revenue have growth at a CAGR of 44% and 23% respectively, between FY14 and FY19.
The company’s stellar performance has been due to strong growth in the domestic Hepatitis C (liver infection) franchise and robust sales of gDoxil (used for the treatment of breast and advanced ovarian cancer), gTamiflu (for influenza) and gCopaxone (for multiple sclerosis).
Similar to its strategy in the US market, Natco Pharma has adopted a niche expansion model in India. It chose to increase its presence in specific areas (such as with gCopaxone), rather than chasing all products in the generic drugs space, because the competition is less.
Today, it’s a market leader with a 20% share in the oncology segment, and there is further room for growth. India’s under-penetrated oncology segment provides a massive opportunity for a market leader like Natco Pharma to solidify its presence. With a strong balance sheet, firm roots in its domestic business and an increasing presence in other geographies, Natco Pharma offer a good risk-reward ratio for investors with the stock trading at a P/E of 13x for FY21.
Saint-Gobain, the construction material maker, has two parts to its operations in India: Saint-Gobain Ind