INSUBCONTINENT EXCLUSIVE:
Mumbai: Shares of pharma companies slumped in firm a market on Wednesday as a string of adverse news flow and weak corporate earnings
Investors may need to brace for some more declines in these shares in the foreseeable future but this weakness could be an opportunity to
Biocon, Strides Shasun, and Neuland Laboratories are among the top picks of analysts.
The Nifty Pharma index fell 1.4 per cent to 7,744.30
on Wednesday after hitting a 5-year low of 7,550.55 intraday
The Sensex rose almost 1 per cent.
Glenmark Pharma, the biggest loser in the sector, fell 7.8 per cent to Rs 383.25 after the company’s
profit declined 53 per cent to Rs 109.3 crore in the June quarter
Dr Reddy’s ended 2 per cent lower after falling as much as 8 per cent during the session following reports that the company could have to
delay the launch of its generic version of contraceptive NuvaRing
Sun Pharma, despite strong June quarter results, fell 4.7 per cent.
Various pharma shares such as Lupin, Cadila, Sun and Glenmark have
fallen about 40-60 per cent in the last three years because of regulatory issues in the US
With their generic drug business coming under pressures, many of their earnings have taken a hit
Fund managers said the situation has improved.
“When we look at the rate of change over the last one year, there has been improvement in
the generic markets in the US, companies are taking cost cutting measures and there has been stability in domestic business which was facing
GST challenges last year,” said Sailesh Raj Bhan, deputy CIO - equity investments, Reliance Nippon Life Asset Management.
Share valuations
of many companies have fallen from their highs three years ago but many, like Sun, Lupin and Cipla, are still not cheap because of pressure
on earnings, said analysts.
The Nifty Pharma index has fallen 5.9 per cent in the last one month, underperforming the benchmark Nifty which
has fallen 4.8 per cent during the same period
Analysts said the price erosion in the US, which has been the chief reason for the downturn in pharma sector stocks in the last few years,
seems to be settling down and most companies are reporting 8-12 per cent growth in India business.
“Even regulatory headwinds seems to
Little bit of time correction is left but is a good time to start looking at pharma," said Sunil Singhania, founder, Abakkus Asset Manager
