Emerging Market drugmaker’s revenues to double over a decade
With limited room for market expansion left at home, multinationals based in developed markets (EFA) (VEA) are shifting resources towards expansion in emerging markets. If we look at the pharmaceutical space, specifically, revenues from emerging markets are projected (by BMI research) to double over a decade. Despite Big Pharma shifting into high growth markets internationally, a select number of long established local drugmakers in these markets are uniquely positioned to capture a great deal of this growth.
The 7 largest emerging market drugmakers
Moreover, rising per capita incomes coupled with increasing accessibility to formalized healthcare should ensure that the emerging markets pharmaceutical industry offers growth and returns to its investors. We filtered the universe of emerging market companies operating in the pharmaceutical manufacturing space to arrive at the 7 largest stocks.
|Ticker||Name||Country||Mkt Cap ($trillions)||YTD Return|
|KLBF.JK||KALBE FARMA TBK PT (PTKFY) (PTKFF)||Indonesia||82.27||15.18%|
|207940.KS||SAMSUNG BIOLOGICS CO LTD||South Korea||18.10||80.79%|
|DHG.VN||DHG PHARMACEUTICAL JSC||Vietnam||14.66||69.9%|
|068270.KQ||CELLTRION INC||South Korea||13.30||1.96%|
|INAF.JK||INDOFARMA TBK PT||Indonesia||8.37||-43.16%|
|008930.KS||HANMI SCIENCE CO LTD||South Korea||4.91||49.73%|
|Market capitalization and return figures as of August 18, 2017|
1. PT Kalbe Farma Tbk. (KLBF.JK) (PTKFF) (PTKFY)
PT Kalbe Farma Tbk, based in Indonesia, is southeast Asia’s largest listed pharmaceutical company. Kalbe Farma’s main business focus rests on four divisions: prescription pharmaceuticals, consumer health products, nutritional goods, and distribution and logistics. The company derives 95% of its revenues from Indonesia. ROCE for the company’s stock was reported at 20.56% for FY16.
With a market capitalization of over $82 trillion as of August 18, the company is the largest drugmaker in emerging markets. The company’s stock trades on the Jakarta Stock Exchange under the symbol KLBF, and on the US OTC market under the symbols PTKFF and PTKFY. KLBF is up 15.18% YTD and trades at a P/E ratio of 34.52. The stock comes with a 1.26% dividend yield. From a buying perspective, analysts that reviewed the stock have a 3.5/5 rating on the stock.
2. Samsung Biologics Co., Ltd. (207940.KS)
South Korea-based Samsung Biologics, the healthcare arm of Samsung C&T Corporation (028260.KS), is engaged in the research, development, and commercialization of biopharmaceutical products worldwide. Samsung Biologics currently commands over $18 trillion in market capitalization which makes it the second-largest drugmaker in the emerging markets. The company’s stock trades on the Korea Stock Exchange under the symbol 207940, and is up 80.79% YTD. From a buying perspective, analysts that reviewed the stock have a 4.25/5 rating on the stock.
3. DHG Pharmaceutical Joint Stock Company (DHG.VN)
DHG Pharmaceutical Joint Stock Company, together with its subsidiaries, manufactures and sells pharmaceuticals in Vietnam. ROCE for the company was reported as 22.70% for the FY2016.
With $14.66 trillion in market capitalization, the company’s stock trades on the Ho Chi Minh Stock Exchange under the symbol DHG. The stock is up 69.9% YTD and trades at a current P/E ratio of 22.1. Forward P/E for the stock is estimated to lower to 18.87 by December 2017, according to Bloomberg data. The stock has a gross dividend yield of 2.10%. From a buying perspective, analysts that reviewed the stock currently have a 2/5 rating on the stock.
4. Celltrion, Inc. (068270.KQ)
South Korea-based Celltrion, Inc. is a global biopharmaceutical leader with strong research and development (R&D) capabilities in biosimilar monoclonal antibodies (mAbs) and novel drugs for various therapeutic areas, including oncology and autoimmune diseases. ROCE for the company was reported at 9.5% for the FY2016. With $13.30 trillion in market capitalization, the company’s stock trades on the Korea Stock Exchange under the symbol 068270.
The stock was up 1.96% YTD as of August 18, 2017. Trading at a current P/E of 45.77, forward P/E for the stock stands at 40.71 (Dec’17 estimate) currently. From a buying perspective, analysts that reviewed the stock currently have a 4.4/5 rating on the stock.
5. PT Indofarma (Persero) Tbk (INAF.JK)
Indofarma Persero Tbk PT operates as a state-owned enterprize that produces pharmaceuticals and health products in Indonesia. The company’s product offerings include generic, branded, licensed, and over the counter (OTC) drugs as well as traditional herbs, health food, cosmetics, and supplementary baby food. Additionally, the company is engaged in producing packaging materials, machinery and equipment, and infrastructure related to pharmaceutical industry. 99% of the company’s revenue accrues from Indonesia.
Trading under the symbol INAF on the Jakarta Stock Exchange, the stock commands a $8.37 trillion in market capitalization. The stock is down by 43.16% YTD.
6. Traphaco Joint Stock Company (TRA.VN)
Yet another Vietnamese pharmaceuticals company made it to the top 7 emerging market drugmakers list. Traphaco JSC manufactures and trades pharmaceutical products, chemicals, and medical supplies and equipment in Vietnam. The company reported an ROCE of 23.26% for the FY2016.With about $4.97 trillion in market capitalization, the company is the 6th largest drugmaker in the emerging markets. The stock trades on the Ho Chi Minh Exchange under the symbol TRA. The stock is up 25.79% YTD and trades at a P/E ratio of 22.66 currently.
7. Hanmi Science Co., Ltd. (008930.KS)
South Korea-based Hanmi Science produces pharmaceutical products, including antibiotics, vitamins, and intestinal tonics. The Company also provides beverages and processes soft capsules for other pharmaceutical firms. 99.2% of the company’s revenue accrues from South Korea itself. The company’s stock trades on the Korea Stock Exchange under the ticker 008930, and commands over $4.9 trillion in market capitalization currently. The stock is up 49.73% YTD.