Alkem is a leading pharma company with a strong domestic business with 15 of the company’s brands in the top 300 in India. It is present in several therapeutic categories where it is amongst the top 5 player. The company is gradually and selectively expanding its presence in US generics market. Despite intense competition in all the markets, the company has been able to generate industry beating growth rates due to aggressive and focused marketing. Investment in R&D and capex for biosimilars may pressure margins but presence of strong brand portfolio is a strength. Price controls on domestic brands and negative outcome of US FDA inspection are threats . We have an over weight rating on the stock due to attractive valuations, excellent regulatory track record and relatively low exposure to US generics market which is once again witnessing severe price erosion due to competition
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