Series 75 – Why ITUS has Pharma as Overweight Sector today?

Last week we had given you a brief on how we think about valuation in the market. This week, we aim to address some questions from our partner regarding our overweight positioning in the pharmaceutical sector.

US-based drug manufacturing companies faced significant challenges until 2022 due to the erosion of pricing power caused by the consolidation of buyers in the US. This led to the shutdown of many plants and a shortage of supplies. However, we are now witnessing a reversal of this trend, with reduced pricing power erosion benefiting US-focused generic drug manufacturers and improving their earnings. And In India portfolio of generic drug manufacturers, we are experiencing volume and execution growth, leading to RoCE expansion.

This mirrors a similar trend observed in 2014, with expectations of growth through earnings from the US Manufacturers and margin expansion through their India portfolio. We have been adding exposure to Pharma through June 2023 and we continue to buy them at the right valuation.

We have highlighted this in our Q1 Quarterly review report – link is given below for you to go through.

https://ituscapital.com/articles/portfolio-review-3q-fy24/

We will come back with more interesting information on the portfolio and outlook on the market in the following weeks.

Also, we keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into the client’s portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital