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Bernstein has initiated coverage on the India Healthcare sector with a positive view, calling it an "Innovation Power Decade" and projecting the country's biopharma industry to grow 4X to $195 billion over the next decade, driven by niche therapies and complex specialities.
A Bernstein report said that the brokerage sees six innovation "rainmakers" adding $70-75 billion to industry size. These include 505(B)(2) NDAs, orphan indications, drug-device combinations, drug repurposing in niche therapies, metabolic peptides, and RNA and cellular therapies such as CAR-T. "We believe incremental innovation in six niches will produce Rainmakers for Indian biopharma," the report said. Bernstein has initiated its coverage on six stocks in the pharmaceuticals and healthcare sector. The brokerage said Zydus Lifesciences is its top pick with an Outperform rating, alongside Lupin and Sun Pharma, also rated Outperform. Biocon and Mankind Pharma are non-consensus Underperform ideas, while Aurobindo Pharma is rated Market-Perform. The firm said valuations for its Outperform names are trading "well below their ten-year average", adding that the market is pricing in domestic growth and US vanilla generics headwinds but not the rainmakers and Emerging Markets growth. The broader thesis rests on three waves. First, the AI-led theme of 'live longer, look fitter, invest in healthcare' will drive innovation demand. Access to next-generation medicines, obesity control, mental well-being, nutraceuticals, preventive medicine like vaccines and wearables, personal hygiene, and digital healthcare will be key as the global workforce upgrades. Bernstein estimates these new modalities will add 100 million patients each year globally, creating a $400 billion incremental innovation opportunity. Second, increasing health infrastructure penetration in emerging economies, an exponential rise in disposable income from AI leverage, and a lifestyle shift toward image consciousness will accelerate adoption. Third, quality culture and "Agenetic AI" gains will be the strongest catalysts for the innovation ecosystem. "Indian Biopharma quality is on a transformation path and will anchor exports of these innovation medicines," the report noted. Bernstein's proprietary model suggests Indian biopharma will have the largest network of future-ready plants globally over the next decade. Gen AI adoption is expected to pivot to innovation efficiency, with three to four percentage points of profit margin upside from enterprise-wide AI use cases. R&D and operations are expected to drive 70% of this AI-led profitability unlock. While Pharma Nifty multiples have accelerated to slightly above their ten-year average of 30.5x, Bernstein said policy uncertainties are winding down and valuations remain attractive for select names positioned to capture the innovation-led scale-up in earnings. (ANI)
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