Here is the edited transcript of the interview on CNBC-TV18.
Q: I am going to start with Biocon. Post the BMS or Bristol-Myers Squibb deal on oral insulin, where do you think Biocon is headed in terms of valuations and how much of an upside do you actually see from this option agreement?
A: The BMS deal was incrementally positive for the oral insulin program of the company but, I think still it is a little far away from phase II studies where the company has to clearly establish the efficacy and safety of the product. Till those studies are over and we see more commitment from BMS in terms of actual license payments or milestone payments, I think it's a bit too early to take a call on that. But, if it succeeds it could be a really big drug for the company.
Q: You have a buy on Dr. Reddy's, what are you pinning your hopes on?
A: Dr. Reddy's has performed really well over the last two three years both in the US market and in the domestic market except for that brief period of slowdown, they have done well. In other markets like Russia and other emerging markets they have done well. Going forward also, I think reasonably good performance should continue.
Strong earnings growth should continue even beyond the current phase that we are seeing and even in the near term second half of FY13 should be a very good period where they will have some extra revenues coming in from so far undisclosed products in the US. Despite all this, the stock is trading cheaper than peers like Lupin, Cadila, Cipla, etc which I think makes the stock attractive. I believe valuation re-rating together with earnings growth should give a 25 percent plus upside for the stock over the next one year.
Q: Wanted your view with regards to Cipla because that one actually had a very good set of Q2 FY13 numbers, not to mention Q1 FY13, so the first half of the fiscal has been pretty strong in terms of fundamentals for Cipla, how much of an upside do you see in terms of the remaining part of the fiscal possibly from a EPS as well as valuations which could extend into FY14? What is the target price that you would be working with?
A: The first half of this fiscal for Cipla was extremely great. But, I would take a wait and watch policy there because the first half also had the benefit of one-off Lexapro sales in the US. Excluding that one-off benefit, which will go away in subsequent quarters, I doubt if the base business has improved as significantly as the street is currently seeming to build in.
I would wait for next quarter numbers to see how much of the good set of numbers have come from base business and how much is one-off and further upside from these levels I think strictly depends upon that outcome.
More to come.
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