MOSL: GSK PHARMA (Neutral)-In line results-Margin improved
​GSK Pharma: In line results; Margin improved
(glxo IN, Mkt Cap USD3.2b, CMP INR2442, TP INR2700, 11% Upside, Neutral)
- GSK Pharma’s (GLXO) 3QFY17 sales increased 11.3%YoY to INR7.6b (5% above est.), while EBITDA declined 4.5%YoY to INR1.2b and EBITDA margins came in at 15.3% (vs 17.8% in 4Q FY16; sequentially margins bounced backed from 5.1%). Reported PAT increased 25.5%YoY to INR1.1b mainly due to one-time income from sale of properties and proceeds on divestment of Non-Core Brands.
- Regulatory issues impacted growth in FY17: Sales for full year of GSK Pharma stood at INR29.3b (6.8%). Sales growth of the company was adversely impacted by 5% due to mandatory price revisions. EBITDA declined significantly by 23.5% to INR3.5b due to regulatory issues and pricing pressure. This dragged the margins to 11.8% from 16.5% in FY16. Slower growth in revenues and lower margins led to decline in PAT by ~7% to INR3.4b in FY17.
- Margins improvement is key: Regulatory issues continued to have a negative impact on margins in 4Q, as gross margins declined ~220bp QoQ. According to AIOCD, FDC related market continued to drag companies, as FDC related market declined 18.4%. Secondary sales increased 8.2% for 4QFY17 in line with market sales.
GlaxoSmithKline is a global healthcare company. Co.'s segments include: Pharmaceuticals; Vaccines; and Consumer Healthcare. The Pharmaceuticals segment is focused on developing new medicines in respiratory, HIV, oncology and immuno-inflammation, with discovery research exploring these and other areas. The Vaccines segment has a portfolio and pipeline of vaccines to help protect people throughout life. Co. delivers vaccines to people living in over 160 countries. The Consumer Healthcare segment develops and markets consumer-preferred brands in oral health, pain relief, respiratory, nutrition/gastro-intestinal and skin health.
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