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Speaking to CNBC-TV18, S Ranganathan of LKP Shares said that there are four spaces in the pharma space that could benefit in the next one-year. It includes the contract manufacturing space, which could do well, as they are vertically integrated across APIs and intermediaries.

The second space is the R&D based companies, where there might be some scale-up. Apart from that, the midcaps having a strong presence in the domestic market and scaling up the generic business could also benefit. The fourth beneficiary could be the multinational companies, that are cash rich and trying to acquire brands.

Excerpts from CNBC-TV18’s exclusive interview with S Ranganathan:

Q: There has been a significant run-up in pharma shares, both in heavyweights as well as in the midcap space. What are the specific categories of the pharma space that will be able to benefit in the next 12 months?

A: If one has to categorise specific segments, it would firstly be the contract manufacturing space, wherein you have leading players like Jubilant, Divi’s Labs and Nicholas Piramal.

These are the players who could do well, going forward, in the CRAMS space, primarily because most of these companies are vertically integrated across APIs and intermediates. It is a logical extension for them to leverage their chemistry skills over here. So, this is one space, which we believe will do well.

The second space would obviously be the R&D based companies, like Glenmark and Lupin, where we will see scale-up happening. The recent trend towards spinning off the R&D makes sense, especially for companies who have a robust R&D pipeline. That is a space to watch out for.

Thirdly, it would be companies in the midcaps, who have a very strong presence in the domestic market and are also scaling up their generic business. So, these are the three spaces we would watch out for.

Lastly, some of the multinational companies, who are cash rich and are trying to acquire brands, even though they are not really available. So, these are the four spaces within the sector, where one could be looking at.

Source: Moneycontrol.com