BSE Healthcare hits new high; rallies 10% in 1 month on strong outlook

Solara Active Pharma Sciences, Indoco Remedies, Dishman Carbogen Amcis, Krishna Institute of Medical Sciences, Divi's Lab, Strides Pharma, Narayana Hrudayalaya and Vijaya Diagnostic were up 5 per cent

Shares of pharmaceutical companies were in focus as the BSE Healthcare index hit a new high of 42,009 in Wednesday’s intra-day trade. Notably, the index has rallied 10 per cent in past one month on strong outlook.

Solara Active Pharma Sciences, Indoco Remedies, Dishman Carbogen Amcis, Krishna Institute of Medical Sciences (KIMS), Divi’s Laboratories, Strides Pharma Science, Narayana Hrudayalaya and Vijaya Diagnostic Centre were up 5 per cent in intra-day trade.

At 11:13 AM, BSE Healthcare index was up 0.72 per cent, as compared to 0.16 per cent decline in the BSE Sensex. In the past one month, the healthcare index has surged 10.1 per cent, as against 0.22 per cent rise in the benchmark index.

 

Shares of Vijaya Diagnostic Centre hit a record high of Rs 937.80, rallied 5.5 per cent in intra-day trade today. In past one month, it surged 23 per cent after reporting another strong quarter with a year-on-year (YoY) revenue increase of 29.1 per cent, driven by higher volumes. Profit after tax (PAT) jumped 19.6 per cent Y-o-Y at Rs 31.35 crore in June 2024 quarter (Q1FY25).

The company said this growth was primarily driven by increased footfall and test volume, with its wellness holding strong at 13.4 per cent.

Shares of Ipca Labs hit a 52-week high of Rs 1,420, up nearly 3 per cent on reports of the company planning to ramp up its US generic business following the resolution of regulatory issues concerning its manufacturing facilities and integration of Unichem. 

The management is aiming for consolidated US revenue of $200 million (Rs 1,675 crore) over the next 12-18 months whereas Unichem clocked revenue of $120 million during FY24. Prior to import ban in June 2017, Ipca's US business had been generating revenue of $30-35 million per annum.

Ipca has a product pipeline of around 40 products that it has filed in the US whereas it plans to add 12-13 in next two years. on the other hadn, Unichem plans to add 5-6 formulations in FY25, the Economic Times reported.

Meanwhile, the brokerage firm InCred Equities in sector note said the Q1FY25 earnings report card was in line-to-better for its coverage universe, with only two misses and two downgrades. The coverage companies’ revenue grew 11.7 per cent Y-o-Y and 5 per cent Q-o-Q while the margins expanded by 240 basis points sequentially and Y-o-Y. Except for Gland Pharma and Laurus Laboratories, the performance of the coverage companies was in line or above brokerage firm’s estimates.

“Our broader thesis on the coverage universe remains intact, with the US business largely holding up its strong momentum, reduced raw material prices leading to improved gross margin & sustenance of operating margin, and the domestic business recovery on the cards in FY25F,” analysts said in sector report.

The brokerage firm remains broadly optimistic on the sector and expects the outperformance to largely continue, with the momentum sustaining in India/US markets as well as on the margins front. “We prefer stocks having earnings momentum likely staying strong in the medium term. We remain bullish on Aurobindo Pharma, Ajanta Pharma, Lupin and Zydus Lifesciences, while Divi’s Laboratories can be a dark horse with optionality from the Biosecure Act,” it added.

Meanwhile, the Indian pharmaceutical market will likely grow substantially, with medicine spending expected to reach $38-42 billion by 2028, reflecting a compound annual growth rate (CAGR) of 7-10 per cent between 2024 and 2028. Acute therapies like anti-infectives and vitamins/minerals saw improved volumes in 2023, while chronic therapies, including cardiac and respiratory segments, continue to perform well, Sun Pharmaceutical Industries said in its FY24 annual report.

Furthermore, the global medicine market is expected to continue on its growth path over the next five years driven by higher spending in regions such as the US, Europe and key Emerging Markets. Newly introduced branded products, increased uptake of original medicines and adoption of novel therapies will drive growth in these regions. At the manufacturer level, net sales growth is expected to be lower due to various factors including rebates and government mandated discounts.

In the developed markets, medicine spending will likely be in an annual range of $1.775 trillion to $1.805 trillion by 2025. Innovative therapeutics are expected to drive this growth trajectory despite challenges from generic and biosimilar competition. Immunology treatments should exhibit steady utilisation increases, offset by emerging biosimilar competition. Also, the spending in developed markets will likely accelerate, led by new products and existing branded medicines, the company said.