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Informist, Friday, Dec. 20, 2024

MUMBAI – Pharmaceutical stocks could continue to gain the favour of equity investors next week, at a time when global macroeconomic worries are keeping risk-appetite low across financial markets, according to analysts. The Nifty Pharma index has gained 1.6% this week, compared with a near 5% fall in the benchmark Nifty 50.  

The defensive nature of their business as well as expectation that diversification of supply chains of large pharmaceutical companies away from China will benefit Indian players, could make the pharmaceutical sector an attractive bet, especially after the recent sell-off seen in some stocks, said the head of retail research at a broking house. Strong demand for initial public offerings of pharmaceutical companies in recent times also signals positive sentiment for the sector, he added. 

The Indian pharmaceutical market has grown by 8% in the year 2024 and has shown a healthy five-year compounded annual growth of 10.4%, according to Pharmarack Technologies. This growth was driven by new launches and price increases, the research firm said in a report on Thursday.

For the next 12 months, Pharmarack expects the 8% growth rate of the Indian pharmaceutical industry to sustain, on a moving annual total basis. The Indian pharmaceutical market's revenue grew by 9.9% in November, driven by strong sales of cardiovascular, urological, and gastro-intestinal drugs. 

While the Indian business is seen healthy, the US operations of Indian drugmakers could face near-term headwinds, including regulatory issues at some manufacturing facilities, delays in new launches, policy changes under President-elect Donald Trump's administration and rising costs, experts have warned. However, the overall pipeline of companies, and investments being made for innovation, place India in an advantageous position to grab market share from China, they added. 

Churn within the sector is expected to continue, believe analysts, with the companies having complex and specialty drugs in their portfolio being preferred, along with contract manufacturing and development firms.

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* Lupin acquires 3 anti-diabetes trademarks from Boehringer Ingelheim
 

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Apoorva Choubey 

Edited by Akul Nishant Akhoury

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