>WYETH: Wyeth’s flagship brand Prevenar 13 is the market leader

Wyeth is a leading MNC pharma company with strong product portfolio in the domestic market. Its six major brands are growing faster than the market and are likely to drive future growth. Wyeth has plans to launch vaccines and OTC products of its parent company. The company is a leading player in the oral contraceptive (OC) segment and has 27% MS. We initiate coverage on the company with a Buy rating and target price of Rs1,267 based on 15x FY14 earnings.


■ Strong product portfolio: Wyeth’s six major brands appear in the list of top 300 brands. These are: Folvite, Mucaine, Ovral-L, Wysolone, Ativan and Prevenar 13. All these brands are growing faster than the market and are likely to drive future growth for the company.


■ Prevenar – largest selling vaccine: Wyeth’s flagship brand Prevenar 13 is the market leader and is the largest selling vaccine in India. It generated sales of ~Rs1.2bn in CY11. With the introduction of 13 variant Prevenar 13, Wyeth has launched a superior product at the same price. We expect Prevenar 13 to maintain its leadership position in the domestic vaccine market.


■ Prominent presence in OC segment: Wyeth has prominent presence in the OC segment with 27% MS. The company markets Loette, Ovral-L, Ovral-G and Premarin in the domestic market. These products are likely to be future growth drivers for the company.


■ Enjoys benefits of rationalisation: Wyeth has rationalised its employees over the years. The company has been successful in reducing the number of employees from 920 in FY06 to 512 in FY11 (16m). The maximum reduction of 37% from 813 to 512 was achieved in FY11 by transferring over 200 MRs from Wyeth to Pfizer. With this, the employee cost of Wyeth has come down sharply. We expect Wyeth’s margin to improve from FY12 onwards due to the expected reduction in employee cost.


■ Initiate coverage with a Buy rating: At the CMP of Rs858, the stock trades at 12.2x FY13E EPS of Rs69.9 and 10.1x FY14E EPS of Rs84.5. We expect the company to maintain strong growth in vaccines, oral contraceptives and folic acid segments. We initiate coverage on Wyeth with a Buy rating and target price of Rs1,267 based on 15x FY14E earnings of Rs84.5.


RISH TRADER