Pharma shares shine; Dr Reddy's, FDC, Glenmark, Suven trade at record highs

Shares of Wockhardt hit a multi-year high of Rs 943.20, zooming 65 per cent in past nine trading days.

Shares of pharmaceutical companies were in focus, and rallied up to 12 per cent on the BSE in Wednesday’s intra-day trade on stable outlook. The BSE Healthcare index hit a new high of 37,523.89, up 1 per cent in intra-day trade. Medicamen Biotech, Krsnaa Diagnostics, Wockhardt, FDC, Glenmark Life Sciences and Ami Organics were up in the range of 5 per cent to 12 per cent.

Dr Reddy’s Laboratories, FDC, Glenmark Pharmaceuticals, Glenmark Life Sciences, Granules India, Suven Pharmaceuticals and SMS Pharmaceuticals hit their respective record highs, while, Biocon and Wockhardt were quoting at multi-year highs.

According to a recent report by IQVIA on use of medicines, the global medicine market is expected to grow more than $600 billion to reach a size of around $2.3 trillion by CY2028 - indicating a compounded annual growth rate (CAGR) of 5 per cent - 8 per cent. Availability of innovative therapeutics in developed markets, offset by losses of exclusivity and the lower costs of generics and biosimilars will drive this growth.

 

Among individual stocks, Dr Reddy’s Labs hit a record high of Rs 6,524.95, gaining 2.4 per cent in intra-day trade. The stock of drug maker surpassed its previous high of Rs 6,505.50 touched on February 28, 2024.

Across the top 10 developed markets, the impact of brand losses of exclusivity between CY2024 and CY2028 is expected to double to around $192 billion versus $81 billion in the previous five years. 30 per cent of this is on account of availability of biosimilars. Global biotech spending is set to exceed $890 billion by CY2028, with growth slowing to 9.5 per cent - 12.5 per cent due to the impact of biosimilars. The losses of exclusivity (LOE) events will provide opportunities for generic and biosimilar players to grow, and also reduce healthcare spends for the patient, Dr Reddy’s Labs said in its FY24 annual report.

Brokerage firm Elara Capital has a ‘Buy’ rating on Dr Reddy’s with a target price of Rs 7,328 per share. The company continues to be a key beneficiary of the upcycle in the US generics market that we believe is still in its early stages. The large cash flow from the gRevlimid opportunity is helping DRRD further its inorganic strategy in a sensible fashion. While Dr Reddy’s US generic pipeline is weaker than some of its peers, the brokerage firm still sees upsides from some existing key products and complex products in the pipeline, including biosimilars and peptides.

Shares of Wockhardt hit a multi-year high of Rs 943.20, soaring 12 per cent on back of three-fold jump in average trading volumes. The stock is trading higher for the ninth straight day, zooming 65 per cent during the period.

In what could be a major breakthrough for antibiotic research, Mumbai-based Wockhardt is all set to launch its novel antibiotic candidate WCK 5222, or Zaynich, in India by the end of 2024-25, followed by a global launch in 2025-26. The total addressable market for the antibiotic is estimated to be around $25 billion globally. CLICK HERE FOR FULL REPORT

Shares of Granules India hit a new high of Rs 510.30, up 4 per cent in intra-day trade today. In the past one month, the stock has surged nearly 20 per cent.

Granules is a large-scale vertically integrated company that manufactures API, intermediates and finished dosages. It owns eight manufacturing facilities catering mainly for export markets (~94 per cent of sales).

Granules is strengthening key APIs through backward integration into KSMs via green energy root. Granules CZRO's primary goal is to strengthen the key molecules i.e., Metformin and Paracetamol through backward integration into DCDA and PAP respectively. It has also made significant progress in biocatalysis with two products already through the pilot process.

The company is focusing more on Formulations (FD) to drive growth backed by volumes especially in the US and Europe. The focus especially in the US is shifting from Para 2 to Para 3 / Para 4 launches with better unit economics. It plans to file 7- 8 products in the US every year. The company is also focusing on Oncology as a segment with dedicated API and formulations block at Vizag, ICICI Securities said in its stock update. The brokerage firm has ‘Buy’ rating on the stock with a target price of Rs 515 per share.