Divi's stock: Pricing pressure for drug makers can lead to more outsourcing

Analysts at Motilal Oswal Securities expect Divi's earnings before interest, tax, depreciation and amortisation (Ebitda) margin to improve by 400 basis points to 36 per cent

Divi’s Laboratories is among the few pharma companies that have outperformed in the last one year with its share price ticking up 75 per cent.

Regulatory concerns regarding the contract research and manufacturing services (or CRAMS) major, which get most of its revenue from exports, have hurt the Street’s sentiment. But Divi’s has initiated several measures to resolve US Food and Drug Administration (FDA) issues.

The company’s Unit II at Vishakhapatnam had received an import alert from the FDA in December 2016. But Divi’s has completed the remediation in time and received an establishment inspection report in 2017.

Having cleared regulatory issues, Divi’s