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Shares of pharmaceutical companies are on a roll with most of the frontline stocks are trading multi-year highs on the bourses.
The rally is driven by a strong operational performance during the recently concluded quarter and weaker rupee against the dollar, analysts say .
“The Indian pharmaceutical industry continued to exhibit strong operating performance during 2013-14 as pharma companies continued to take advantage of patent expiration wave in the US, steady demand from emerging markets and favourable foreign exchange scenario,” suggests an ICRA report.
Cipla, Sun Pharmaceutical Industries, Lupin, Cadila Healthcare, Aurobindo Pharma and Glenmark Pharmaceuticals from the frontline pharma stocks are up in the range of 2-4%, quoting at their lifetime highs on the Bombay Stock Exchange (BSE).
Jenburkt Pharmaceuticals, Shasun Pharmaceuticals, Amrutanjan Healthcare, FDC, Indoco Remedies and Orchid Chemicals from the mid-and-small-cap pharma shares rallied between 10-20%.
S&P BSE Healthcare index, a gauge of pharmaceutical companies, has surged 354 points or 2.8% at 13,120 compared to 79 points or 0.3% decline in S&P BSE Sensex at 1325 hours. The pharma index hit a new lifetime high of 13,122 in intra-day deals today.
In past eight trading sessions, the healthcare index has outperformed the market by gaining 8.6% against 2.9% gain in the benchmark index.
Healthy performance
In the recently concluded quarter, 156 pharmaceutical companies have reported 43% year-on-year (y-o-y) growth in aggregate net profit at Rs 5,043 crore on back of 16% y-o-y rise in net sales for the quarter ended June 2014. PBITD (profit before interest tax and depreciation) almost doubled to Rs 8,647 crore from Rs 4,466 crore over the previous year quarter, the Capitaline data shows.
Many of the companies witnessed improvement in EBITDA margins on back of their strong performance in the U.S. and currency tailwinds, others saw contraction as the industry faced more headwinds during the year than previously.
Analysts believe Indian pharma companies would continue to experience strong growth in the U.S. over the medium-term.
“This would be driven by the sizeable generic opportunity (drugs with brand value of US$ 25-30 billion are expected to face generic competition) over the next 2-3 years and strong product pipeline of pending ANDAs with high increasing proportion of complex generics that compares favorably with generic majors such as Teva, Mylan and Actavis,” the ICRA report suggests.
Meanwhile, Glenmark Pharmaceuticals is trading 2.5% higher at Rs 738, after the company announced its forays into oncology with discovery and initiation of an innovative bispecific antibody, GBR 1302 molecule. The stock touched a record high of Rs 749 during intra-day trade on BSE.
“GBR 1302 is the first clinical development candidate based on the BEAT technology. The company expects to obtain approval for the initiation of clinical studies during this fiscal,” Glenmark Pharma said in a statement.
The GBR 1302 molecule will focus on treatment of breast cancer better than Herceptin, which could target only 25-30% of the market.
The rally is driven by a strong operational performance during the recently concluded quarter and weaker rupee against the dollar, analysts say .
“The Indian pharmaceutical industry continued to exhibit strong operating performance during 2013-14 as pharma companies continued to take advantage of patent expiration wave in the US, steady demand from emerging markets and favourable foreign exchange scenario,” suggests an ICRA report.
Cipla, Sun Pharmaceutical Industries, Lupin, Cadila Healthcare, Aurobindo Pharma and Glenmark Pharmaceuticals from the frontline pharma stocks are up in the range of 2-4%, quoting at their lifetime highs on the Bombay Stock Exchange (BSE).
Jenburkt Pharmaceuticals, Shasun Pharmaceuticals, Amrutanjan Healthcare, FDC, Indoco Remedies and Orchid Chemicals from the mid-and-small-cap pharma shares rallied between 10-20%.
S&P BSE Healthcare index, a gauge of pharmaceutical companies, has surged 354 points or 2.8% at 13,120 compared to 79 points or 0.3% decline in S&P BSE Sensex at 1325 hours. The pharma index hit a new lifetime high of 13,122 in intra-day deals today.
In past eight trading sessions, the healthcare index has outperformed the market by gaining 8.6% against 2.9% gain in the benchmark index.
Healthy performance
In the recently concluded quarter, 156 pharmaceutical companies have reported 43% year-on-year (y-o-y) growth in aggregate net profit at Rs 5,043 crore on back of 16% y-o-y rise in net sales for the quarter ended June 2014. PBITD (profit before interest tax and depreciation) almost doubled to Rs 8,647 crore from Rs 4,466 crore over the previous year quarter, the Capitaline data shows.
Many of the companies witnessed improvement in EBITDA margins on back of their strong performance in the U.S. and currency tailwinds, others saw contraction as the industry faced more headwinds during the year than previously.
Analysts believe Indian pharma companies would continue to experience strong growth in the U.S. over the medium-term.
“This would be driven by the sizeable generic opportunity (drugs with brand value of US$ 25-30 billion are expected to face generic competition) over the next 2-3 years and strong product pipeline of pending ANDAs with high increasing proportion of complex generics that compares favorably with generic majors such as Teva, Mylan and Actavis,” the ICRA report suggests.
Meanwhile, Glenmark Pharmaceuticals is trading 2.5% higher at Rs 738, after the company announced its forays into oncology with discovery and initiation of an innovative bispecific antibody, GBR 1302 molecule. The stock touched a record high of Rs 749 during intra-day trade on BSE.
“GBR 1302 is the first clinical development candidate based on the BEAT technology. The company expects to obtain approval for the initiation of clinical studies during this fiscal,” Glenmark Pharma said in a statement.
The GBR 1302 molecule will focus on treatment of breast cancer better than Herceptin, which could target only 25-30% of the market.
