How a single tablet helped Natco beat sector blues in Q4

Mumbai: Pharma stocks have been making investors sick. Now, after a series of poor numbers in the sector, a flu drug from Natco Pharma has cheered the markets.

The Hyderabad-based drug maker almost tripled its fourth-quarter net profit to Rs 176 crore, beating market expectations, partly due to sales of Tamiflu (Oseltamivir), a drug used to treat flu, which added $22 million to its earnings.

Natco and its US partner launched the first generic version of Tamilflu. A proprietary drug of Swiss company Roche, Tamilfu is an antiviral that treats type A and B influenza.

Natco also gained on account of the first-mover advantage that it had over the range of generic Sovaldi, the blockbuster drug of US company Gilead used for the treatment of Hepatitis C. The company's Hepatitis C drug sales grew 16% from a year earlier, while its oncolo gy medicines increased 20%.Brokerage firm Jefferies rated the stock a `buy .' “Natco's strong R&D team, complex specialty focus pipeline and lack of significant FDA issues make it one of the best placed Indian pharma companies. Unlike peers, it is not impacted by price erosion in base business. Further, its partnership model (which involves risk, cost and profit sharing) and differentiated products removes concerns on market share that small cap peers face," Jefferies said in its research note.The company has also estimated a 20% growth in FY18, despite lower Tamiflu profits, Jefferies said.

Natco shares gained 1.1% to Rs 943.70 at the close on the BSE on Thursday .

The next milestone for Natco is approval for its generic version of Copaxone, an injection used to treat multiple sclerosis, expected in June.The Hepatitis C drug business too is expected to grow at 15-20%.