INSUBCONTINENT EXCLUSIVE:
Mumbai: Covid-19 fears triggered a selloff in pharma stocks on Thursday, with the BSE Healthcare Index mirroring the more than 8 per cent
decline in the benchmark Sensex.
Glenmark Pharmaceuticals was the biggest loser on the healthcare index, with the Mumbai-based company’s
shares plunging almost 23 per cent, followed by Wockhardt, RPG Lifesciences and Aurobindo Pharma.
The fall came even as India Ratings said
the credit outlook for Indian pharma companies remains positive in the near-term despite the industry’s “heavy reliance” on Chinese
active pharmaceutical ingredients and intermediates.
Data from the All India Chemists and Druggists Association showed the domestic pharma
industry grew 12 per cent in February compared with 7 per cent in the previous month.
The healthcare index dropped 8.3 per cent, while the
Sensex retreated 8.2 per cent after India imposed curbs on international arrivals by suspending most visas until April 15
The US banned travel from mainland European countries in an attempt to halt the spread of the coronavirus.
For the pharma sector, which is
overly dependent on China for ingredients and intermediary products needed to make medicines, a shortage coupled with India’s export
restrictions, has been an overhang
Analysts at India-Ra said if Covid-19 is not contained in the next three months, the extent of supply disruptions might be greater than in
2017, when several small and medium Chinese companies had halted production.
“In case the supply disruption continues over the next
three-to-nine months, the pressures on credit buffers could intensify and rating transitions would be imminent,” India-Ra wrote in its
note on Thursday.
“If the disruption spills beyond the next nine-to-12 months, some of the higher rated corporates could face downward