Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

What has fuelled pharma stocks?
Tue, 28 Sep Pre-Open

The BSE Healthcare index has outperformed the Sensex in the past one year. While the same has been due to the overall buoyancy in the Indian stockmarkets, ramp up in performance has also led to investors flocking to pharma stocks.

Data Source: Prowess

For starters, there was a sharp reversal in fortunes of Indian pharma companies in the past one year as compared to FY09. In FY09 for instance, there were a host of problems plaguing pharma companies. First of all, they had to deal with higher receivables in semi-regulated markets as a result of which sales were hampered. Not just that weaker environment in the US and Europe and fewer approvals meant that sales from these regions also took a beating. Since then, however, there has been growth in sales on the back of more approvals and a consequent increase in product launches in the global generics market.

That said, while the generics business has seen good growth, the same cannot be said for custom manufacturing (for global innovators). With the US and Europe still mired in a slump, many of these global innovators were wary of outsourcing. But the pressure to cut costs means that the case for outsourcing in the longer run remains strong. Operating margins saw an improvement on the back of an improved product mix. Absence of forex volatility (of the kind seen in FY09) meant that Indian companies did not have to report massive forex losses.

The outlook for the pharma sector remains healthy. Drugs worth billions of dollars are scheduled to lose patents till 2013. Hence the opportunity is immense despite intense competition and price erosion. Those focusing on niche products with limited completion will have the edge. The prospects in the domestic market also look good. Although the landscape has been changing on account of a spate of acquisitions made by global innovators in India. At the end of the day, while the outlook for the overall sector is strong, the strategies adopted by various companies to maximize revenues and profits will determine which company will come out on the top.

As far as valuations are concerned, prices of many pharma stocks have run up. And so, quite a few stocks appear expensive. But we urge investors not to get carried away by the overall euphoria that has surrounded the pharma sector. Instead they should take a stock specific approach while investing in the sector.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "What has fuelled pharma stocks?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.