Pharma Stocks under pressure. Why does the Pharma sector continue to be an attraction?
The BSE Healthcare (HC) index of 70 pharmaceutical and healthcare entities remained under pressure during the first quarter ended March 2021 as compared to broad based BSE Sensex. The HC index declined slightly by 1.6 per cent and closed at 21,328.21 points on the last trading day of March, 2021. However, benchmark BSE Sensex of 30 companies during the same period improved by 3.7 per cent to 49,509 points from 47,751 points as at the end of December 2020.
The sentiment impacted due to rising Covid-19 pandemic, fear of lock down, uncertain economic outlook, volatile exchange rates, weaker demand, adverse impact on supply chains and mobility restrictions. Out of 70 companies the share price of 48 companies declined on the last day of March as compared to closing price of December 2020 and 22 companies registered gain. Even multinational pharma company shares were under pressure.
The exchange authorities have included five new companies in the index and removed few scrips during first quarter ended March 2021. It added Max Healthcare, Indraprasth Medical, HealthCare Global (HCG), Gland Pharma and Poly Medicure. Few companies like Kilitch Drugs, Medicamen Biotech, Nectar Life, Opto Circuit, Piramal Enterprises, Vivimed Remedies and Jubilant Pharmova were removed from HC index.
Among 70 scrips, Neuland Laboratories share improved sharply by 91 per cent to Rs. 2,087.95 as on March 31, 2021 as against Rs. 1,094.60 on December 31, 2020 on account of strong financial performance during the first nine months ended December 2020. Its consolidated sales increased to Rs. 692 crore from Rs. 571 crore and net profit jumped to Rs. 63.33 crore from Rs. 25.51 crore in the corresponding period of last year. EPS worked out to Rs. 49.37 as compared to Rs. 19.88 in the last period. The scrip touched to its yearly high at Rs. 2,350 on February 28, 2021 as against yearly lowest level of Rs. 260 on April 3, 2020.Its both businesses viz., generic drug substance and custom manufacturing solutions improved working.
Few other scrips from BSE HC like Poly Medicure, Max Healthcare, Sequent Scientific, Fortis Hospitals, J B Chemicals and Apollo Hospitals went up more than 20 per cent during the first quarter ended March 2021. The majority of these scrips are related to healthcare segment. Poly Medicure is top exporter of plastic medical disposables and surgical items. It distributes products across 110 plus countries with portfolio of over 130 SKUs of disposable medical devices. With Covid-19 pandemic, hospital shares were in limelight. Apollo Hospital, Max Healthcare, Fortis Healthcare improved significantly.
However, few important shares like Bliss GVS, SPARC, Panacea Biotec, Wockhardt and IOLCP declined over 25 per cent during the quarter ended March 2021. BlissGVS scrip declined basically due to poor financial performance as its sales and net profit declined during the nine months period ended December 2020. SPARC and Panacea Biotec shares were under pressure due to net loss of Rs. 94 crore each. SPARC received denial from Office of New Drugs (OND) of the US Food and Drug Administration (FDA) in relation to the New Drug Application (NDA) for Taclantis. Wockhardt, which sold its division to Dr Reddy’s Laboratories, has turned the corner and posted net profit of Rs. 795 crore. Despite profit, Wockhardt scrip declined 24.2 per cent to Rs. 414.25 from Rs. 546.45 as at the end of December 31, 2020.
The shares of multinational pharma companies were under pressure during the first quarter ended March 2021. AstraZeneca Pharma India shares declined sharply by over 35 per cent to Rs. 3,030 on March 31, 2021 from Rs. 4,621 on the last trading day of 2020. Similarly, shares of Novartis India, Pfizer, GlaxoSmithKline Pharma, Procter & Gamble Healthcare, Sanofi India and Abbott India declined during last quarter mainly due to pressure on bottomline.
The overall financial performance of top 10 Indian pharma companies as per sales viz, Sun Pharmaceuticals Industries, Aurobindo Pharma, Dr Reddy’s Laboratories, Cipla, Lupin, Cadila Healthcare, Glenmark Pharma, Alkem Labs, Torrent Pharma and Biocon remained better during first nine months ended December 2020 despite Covid-19 impact.
Their aggregated consolidated sales improved by 6.5 per cent to Rs. 1,20,308 crore from Rs. 1,12,877 crore in the similar nine months of last year. Net profit of 10 companies increased by 37.1 per cent to Rs. 15,104 crore from Rs. 11,018 crore basically due to provision of exceptional items. Sun Pharma, a Rs. 32,837 crore leading Indian pharma player, has declared interim dividend of Rs. 5.50 per share. Similarly, Aurobindo Pharma, Torrent Pharma and Alkem Laboratories also announced interim dividend for 2020-21. Aurobindo declared third interim dividend of 150 per cent.
Despite Covid-19 pandemic and shut down, these companies maintained proper supply chain and focused more on international markets. Indian companies are investing significant amount on R&D and receiving approvals from other countries. Aurobindo Pharma, a second largest pharma company, is generating 95 per cent sales from international market The company divested its holding in a wholly-owned step-down subsidiary Natrol LLC, US during nine months period ended December 2020 and shown a gain of Rs. 3,093 crore. Its cumulative ANDA filing reached at 634 with US FDA and received total approval for 463 ANDAs. Its R&D spending amounted to Rs. 958 crore during 2019-20.
Sun Pharma’s R&D expenditure increased to Rs. 1593 crore during the nine months ended December 2020. It received total approval for 497 ANDAs and awaiting approvals for 90 products. It created a pipeline of 55 approved NDAs. DRL is awaiting cumulatively approval for 89 generic filings from US FDA. Of this 48 are Para IVs and 24 are First to File status. Glenmark’s portfolio consists of 169 products authorized for distribution in the US marketplace and 42 ANDA’s pending approval with the US FDA.
Cadila Healthcare has received approvals to start Phase III clinical trials of Pegylated Interferon Alpha-2b in India and the approval to start Phase III clinical trials of its vaccine ZyCoV-D. The trials for the vaccine are underway and will be tested across 60 locations in 30,000 healthy adult volunteers in India.The company filed 10 additional ANDAs with the US FDA taking the cumulative number of filings to 410 and received 9 new product approvals (including 4 tentative approvals) from the US FDA.
Thus, the focus on international market and R&D will play key role to overcome stiff competition. Compared to other industrial segments, pharmaceutical segment will likely to offer better returns to investors in the study rise in share prices and dividend.
Security Name 31-03-2021 31-12-2020 % Change
AARTIDRUGS 694.80 705.45 -1.51
ABBOTINDIA 14988.65 15760.70 -4.90
AJANTPHARM 1793.25 1633.95 9.75
ALBERTDA 376.75 441.85 -14.73
ALEMBICLTD 102.85 107.10 -3.97
ALKEM 2772.20 2908.70 -4.69
APLLTD 965.15 1033.75 -6.64
APOLLOHOSP 2902.90 2411.30 20.39
ASTERDM 137.30 166.00 -17.29
ASTRAZEN 3010.20 4621.45 -34.86
AUROPHARMA 881.55 920.80 -4.26
BIOCON 408.80 465.35 -12.15
BLISSGVS 98.70 202.30 -51.21
CADILAHC 440.85 476.30 -7.44
CAPPL 404.15 507.00 -20.29
CIPLA 815.25 819.85 -0.56
DCAL 109.00 138.55 -21.33
DIVISLAB 3630.05 3842.45 -5.53
DRREDDY 4515.60 5204.10 -13.23
ERIS 604.45 579.90 4.23
FDC 285.70 331.90 -13.92
FERMENTA 250.30 317.50 -21.17
FORTIS 199.00 154.95 28.43
GLAND 2477.80 2340.25 5.88
GLAXO 1440.40 1623.20 -11.26
GLENMARK 464.55 493.20 -5.81
GRANULES 303.30 352.15 -13.87
GUFICBIO 114.30 116.95 -2.27
HCG 191.05 162.90 17.28
HESTERBIO 1916.75 1708.30 12.20
HIKAL 143.50 164.75 -12.90
INDOCO 288.50 304.25 -5.18
INDRAMEDCO 53.75 57.20 -6.03
IOLCP 550.60 740.25 -25.62
IPCALAB 1902.80 2191.05 -13.16
JBCHEPHARM 1253.60 1017.15 23.25
LALPATHLAB 2707.45 2307.30 17.34
LAURUSLABS 362.05 353.15 2.52
LINCOPH 224.70 243.05 -7.55
LUPIN 1020.95 976.70 4.53
MARKSANS 49.95 60.65 -17.64
MAXHEALTH 206.05 140.15 47.02
METROPOLIS 2241.05 1961.95 14.23
MOREPENLAB 32.15 30.70 4.72
NATCOPHARM 825.15 961.85 -14.21
NEULANDLAB 2087.95 1094.60 90.75
NH 406.10 448.45 -9.44
NOVARTIND 552.00 685.15 -19.43
PANACEABIO 177.40 239.35 -25.88
PFIZER 4521.40 5107.70 -11.48
PGHL 6192.55 6814.45 -9.13
POLYMED 810.60 521.80 55.35
RPGLIFE 387.10 369.10 4.88
SANOFI 7877.20 8317.85 -5.30
SEQUENT 240.90 169.60 42.04
SHALBY 100.85 108.65 -7.18
SHILPAMED 333.80 450.25 -25.86
SOLARA 1394.25 1191.25 17.04
SPARC 141.70 193.90 -26.92
STAR 844.50 877.50 -3.76
SUNPHARMA 597.60 592.35 0.89
SUVEN 70.40 90.60 -22.30
SUVENPHAR 495.40 450.95 9.86
SYNGENE 543.35 639.60 -15.05
TAKE 44.95 53.25 -15.59
THYROCARE 902.95 913.40 -1.14
TORNTPHARM 2541.20 2800.70 -9.27
UNICHEMLAB 309.30 261.45 18.30
VIMTALABS 160.95 174.10 -7.55
WOCKPHARMA 414.35 546.45 -24.17
Indices
BSE SENSEX 49,509.15 47,751.33 3.68
BSE HEALTHCARE 21,328.21 21,681.24 -1.63
