Sun, Lupin, Cipla have fallen 9-15% but fundamental prospects remain unchanged as analysts expect 15-25% earnings growth
India's largest listed pharmaceutical (pharma) company - Sun Pharmaceutical Industries (Sun Pharma) - is expected to maintain its outperformance vis--vis the sector's, as its multiple bets on specialty products, improving product mix, recent acquisitions, and branded business are finding favour with brokerages. While it has gained 7 per cent over the past year, the Nifty Pharma Index is down 13.6 per cent. Its outperformance over two years has been fairly evident, with the market leader gaining 66 per cent to Nifty Pharma's minus 1.4 per cent.
Cipla is among the three Indian companies that signed a non-exclusive licensing agreement with US-based Gilead Sciences to make and distribute the latter's repurposed Ebola drug Remdesivir in 127 countries including India.
The drugmaker has enjoyed big success with low-cost alternatives to AIDS and other high-priced drugs. But NGOs are taking away sales.
Reinvent and innovate will be the key mantra for the Indian pharma industry in the New Year as the 'pharmacy of the world' looks to move from volume to value leadership, amid emerging challenges of inflation and pricing pressures in the global markets. While R&D investment, market competitiveness, regulatory scrutiny, and domestic price regulations are expected to shape the growth of generics and injectable products, concerns such as price control and customs duties on medical equipment will continue to bother the healthcare industry in 2023. The industry believes that in view of India's G20 Presidency, digital health innovation, achieving universal health coverage, improving healthcare infrastructure and delivery will continue to be the key driving factors in 2023.
India's largest pharma companies by market capitalisation Sun Pharma, Dr Reddy's and Cipla have seen their share prices drop 5-20 per cent over the last two weeks on results that were below Street expectations.
From rising prescriptions to the pharma sales force back on the field with full vigour and companies finally finding their feet with the digital marketing strategies - Indian drug makers have shown that medicine sales is certainly a sunshine sector.
India's drug regulator Drugs Controller General of India has granted permission to Mumbai-based pharmaceutical company Cipla to import Moderna's COVID-19 vaccine for restricted emergency use in the country, official sources said on Tuesday.
The government should take measures to promote innovation and R&D while simplifying regulations for the sector in the upcoming Union Budget, as per pharmaceutical industry bodies. Outlining the wish list for the sector in the upcoming Union Budget, Indian Pharmaceutical Alliance (IPA) secretary general Sudarshan Jain said the domestic pharma industry is currently around $50 billion in size and aspires to grow to around $130 billion by 2030 and $450 billion by 2047. "To achieve this vision, the Union Budget 2023-2024 should help fuel innovation and R&D, which will set the pace for propelling the pharmaceutical industry forward," he told PTI.
The BSE Healthcare Index is up 19 per cent as compared to BSE Sensex returns of 11 per cent during this period. Nitin Agarwal of DAM Capital highlighted this trend in a report last month. "After a sustained period of underperformance over FY21-23, the BSE Healthcare Index has once again captured the spotlight. "The recent uptick in performance has been driven by hospitals and emerging green shoots in pharmaceutical exports, particularly to the US, along with sustaining momentum in domestic branded formulations," he said.
India's largest domestic drug maker, Cipla, sold its emergency contraceptive brand, i-pill, to Piramal Healthcare in a deal worth Rs 950 million
Cipla found little sympathy from the market and turned out the Sensex's biggest loser after the company's results proved below analysts' expectations.
In recent months, several pharma multinational corporations (MNCs) are increasingly turning to Indian companies to expand market reach in the country's pharmaceuticals sector. Sanofi's partnerships with Dr Reddy's, Cipla, and Emcure, AstraZeneca and Mankind Pharma - teaming up for asthma medication distribution - are a few instances of this trend. This strategy allows MNCs to leverage established Indian networks and reach a wider audience. Indian companies also benefit from global brands and expertise, say analysts.
In a landmark judgment that has the potential to change the direction of India's pharmaceutical business, the Supreme Court said on Monday that the drug failed to qualify for a patent according to Indian law.
The plan was activated in October last year.
Cipla, though late in changing its strategy for international markets, has in recent years taken an inorganic route for expansion.
However, experts caution that investors should not expect the big returns they got from the sector between March and September 2020.
When compared to the domestic sales of April 2019, the growth is around 37 per cent. However, compared to the previous month (March), the growth is 18.4 per cent.
The rupee's appreciation of 6.4 per cent against the dollar and 12 per cent against the euro is likely to hurt the first-quarter performance of the pharmaceutical sector, indicate a results' preview by broking houses.
Industry insiders in India warn that any such move in the pharmaceutical sector could be counterproductive for the US as it may face increased drug shortages if tariffs are imposed on such imports.
Indian drug firms continue to work closely with the FDA, and most have also appointed consultants to help them grasp the regulatory minutiae in the US.
These are the top buyers of the scrapped electoral bonds, the data for which was released by the Election Commission on Thursday.
Rising penetration of trade generic medicines is eating into the value growth of the domestic pharmaceutical market, showed a recent analysis. According to a Kotak Institutional Equities analysis, 70-110 basis points (bps) annual dent is expected from trade generics and Jan Aushadhi on Indian Pharma Market (IPM) growth at least until FY27-28 (see chart). Trade generic medicines are those that are not pushed into the market through doctor promotions.
Companies run till now by mostly their promoters are increasingly inducting professionals to head their teams.
Drug maker Cipla always fought a lone battle to make drugs affordable in India.
Among the index heavyweights, Reliance Industries ended down 1.9% while mortage lender HDFC eased 0.2%. FMCG major ITC ended down 1.3%.
Favipiravir is the only oral anti-viral treatment approved in India for potential treatment of patients with mild to moderate Covid-19 disease.
Over 550,000 small drug retailers in the country are transforming into producers and marketers of pharmaceutical products, readying to compete with companies such as Ranbaxy, Cipla, Sun Pharma and Lupin whose produce they sell.
Indian drug firms get a shot in the arm in the $12 bn Australian drug market as the Therapeutic Goods Administration (TGA), Australia agrees to accelerate the drug approval process in that country for Indian players who already have an approved plant and product from one of the stringent regulatory authorities like US, EU or Canada. From current sales of $340 mn, the Indian firms can see a significant upside in sales; felt Dinesh Dua, former chairman of the Pharmaceutical Exports Promotion Council of India (Pharmexcil), and the MD of Nectar Lifesciences. He highlighted that only 12 percent of the Australian drug market is generic, as against 80-90 per cent in the US or EU. Of this $1.5 bn generic drug market in India, Indian companies have a small share.
Aggressive smaller players are serving a bitter pill to the big boys in the pharmaceutical sector.
Better-than-expected financial results in Q3 due to higher revenue growth and margins in key markets fuel the rally
Analysts say those taking exposure through stocks could look at firms focused on domestic business
Low growth visibility and trouble with regulators have resulted in lack of interest from investors
Expectations of strong results, consistent performance and investors preference for stocks in the defensive space help the sector outshine broader markets.
