Pricing pressure will continue in pharma sector; Best Stock Advisory
Secondary
sales growth of the Indian pharmaceutical market is better than last 3
months. Growth was 8.1 percent from December to February. But mainly
on the companies operating in the US, there is a pressure of about 9
quarters. Experts say pricing pressure will continue, which will impact
the profits of the companies. However, the impact of problems in the
pharma sector will not affect all companies. Investors should stay
stock-specific and invest in long-term perspectives. Especially those
whose exposure is higher in the Indian market.
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| Best Stock Advisory |
Srikanth
Akolkar, Pharma Analyst, India Infoline (IIFL), which will be on
profitability , says that in the beginning of fiscal year 2018, the
price pressure started on companies operating in the US generic market which
has remained so far. Companies have to lower their product prices due to
the increase in competition in the market and the policy change in the US
government's pharma market. This pressure will continue even
further. In such a way, companies focusing on generic drugs will have an
impact on the profitability of the US market. Although Indian companies
which have a large base and their business modules are better, hopefully they
will handle the pressure.
In
the long run, Gaurang Shah, head investment strategist , of Stable
Outlook Geojit Financial Services Limited, says that any problems of
the pharma sector will take some time to get rid of it. However, the
companies which have higher exposure in the Indian market do not have much
trouble. Investment in good shares is advisable from long-term
perspective. At the same time, according to rating agency India Ratings,
there is stable growth in the domestic market. Sales growth is
better. There is also growth in overhauling new product launches. The
volume growth of generic drugs is also good in US and European
markets. Even after the pressure, the sector's outlook looks stable in the
long run.
According
to the report of the Motilal Oswal, brokerage house brokerage for the
sector, between December and February, there has been 8.1 percent growth
in secondary sales. At the same time, Volume Growth Strong has been made
for 2 months. Volume growth in February was 6.5 percent. New product
launches are stable from 3 to 4 quarters. It has 2.8 per cent growth in
February.
Gaurang Shah, Geoj Financial Services
Arvindo Pharma
Target:
Rs 880, Current Price: 572 Rupees
Returns
Estimates: 54 Percent
Netco Pharma
Target:
Rs 925, Current Price: Rs 761
Returns
Estimates: 22%
Shrikant Akolkar, India Infoline
Netco Pharma
Target:
Rs 1006, Current Price: Rs 761
Returns
Estimates: 32 Percent
Alchem Lab
Target:
Rs 2550, Current Price: 2121
Returns
Estimates: 20 Percent
Boycone
Target:
750 Rupees, Current Price: Rs 579
Returns
Estimates: 30 Percent
Brokerage house Prabhudas Leeladhar
Arvindo Pharma
Target:
909 rupees, Current Price 572
Returns
Estimates: 59 Percent
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