Larger pharmas’ growth set to benefit
most from the ‘second generics wave’,
which is starting in earnest from 2H08
􀀗 Rising API and finished drug exports
also enhance growth whilst proprietary
drug launches look thin until c2011-12
􀀗 Hanmi, Yuhan and Dong-A are well
positioned under these criteria; Hanmi
currently offers great value in our view
We think Korean pharma offers good growth and attractive
valuations, underpinned by resilient structural domestic
demand and supplemented by rising exports. In this report,
we are now overweight every pharma stock under coverage.
So which ones to focus on?
We prefer larger cap stocks for their leading brands,
marketing and distribution capability, and production scale,
enabling them to benefit from market attrition (pricing and
capex pressures from regulators) impacting smaller players
disproportionately. Larger firms generally have strong R&D,
reflected in rising domestic sales of proprietary drugs and
promising pipelines. They can also supplement domestic
growth with overseas operations. Indeed, we expect exports
of higher-end APIs and finished drugs to add near-term
growth for these firms.
Going into 3Q08, we expect larger pharmas to benefit the
most from the ‘second generic wave’, which is starting in
earnest in 2H08 on expiry of local patents on blockbusters
including Plavix, Lipitor, and Cozaar in 2008-09f. The
competitive landscape is tougher than during the ‘first
generics wave’ due to more players this time around, but
generics of these and other originals are set to be a key
driver of growth for the next 2-3 years, especially as
proprietary drug launches by domestic pharmas will be
scarce in 2008-10f.
Under these criteria, we favour Hanmi (OW(V) maintained,
looking great value now), Dong-A (OW maintained) and
Yuhan (upgraded to OW from N). Amongst the smaller caps
our preference remains Green Cross (OW).

目录

The second generic wave 5
Overseas growth 8
2H08 and beyond 10
Appendix 14
Company profiles 17
1H review and 2H outlook
Bukwang Pharma 18
Chong Kun Dang 23
Choong Wae Pharma 28
Daewoong Pharma 32
Dong-A Pharma 37
Green Cross 42
Hanmi Pharma 47
LG Life Sciences 52
Yuhan Corp 56
Disclosure appendix 60
Disclaimer 63