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Informist, Friday, Mar. 21, 2025

MUMBAI – Shares of pharmaceutical companies are expected to consolidate next week. Fundamentals of the sector are broadly improving, with easing of regulatory overhang and pricing pressures, analysts said. Worries about the potential imposition of tariffs targetting the sector by the US administration are slowly beginning to fade, as analysts rule out any hefty tariffs or major adverse effect on the sector.

"There is no dearth of drivers as far as the growth or the profitability (of pharmaceutical companies) is concerned," said Unnati Jadhav, research analyst at Share India Securities. Several companies have been on an acquisition spree in the last few months, which will either help them enhance their growth or enrich the product mix or geographic mix. Most pharmaceutical companies also have a strong balance sheet, which only adds to the strength of the sector, she said.

"The only concern right now is the likely imposition of an additional duty on the imports of pharmaceutical products in the US in place of 0% duty so far," she said. "That is the current scare and that is the major reason why the sector could have corrected...So we find it to be a neutral to slightly negative kind of scenario," she said. If the tariffs get imposed, most companies will be able to pass down the costs, she said. The US cannot do without India because it has the highest number of US Food and Drug Administration-approved plants, after the US. Shifting manufacturing to the US will take its own time, if at all that is something they may want to follow, and it will also be extremely costly, she said.

Meanwhile, Anshul Jain, head of research at Lakshmishree Investment and Securities, does not expect the US to impose any tariffs on pharmaceutical products imported by it. Even if any such tariffs are brought into effect, it will only make drug imports costlier for the country. Trump has been talking about decreasing medical expenses in the US, but imposing import duties on drugs will counter this objective, he said. The Nifty Pharma index will consolidate in the near-term, he said.

Analysts have also shared a positive outlook for contract development and manufacturing companies. "CDMOs seem to be doing better...they are picking up pace for sure, majorly because a lot of drugs have gone off-patent whose generic versions have to come out," Jadhav said. "For this, players such as Divi's Laboratories and Laurus Laboratories are going to be asked to supply, which is definitely very positive for CDMO and API (active pharmaceutical ingredient) players," she said. Secondly, the China-plus-one strategy, where the original manufacturers or the patent-holders want to reduce their dependence on China, is also benefitting these companies.

TOP HEADLINES

* Glenmark gets US FDA OK for Olopatadine Hydrochloride Ophthalmic Solution
* Piramal Pharma division, Ireland co gets UK drug regulator OK for Neoatricon
* Bombay HC junks tax dept notice for re-assessment of Pfizer's income
* Ajanta Pharma to spend INR 920 mln on capacity addition at Pithampur site
* Eli Lilly launches obesity, diabetes drug Mounjaro in India
* Syngene concludes acquisition of its first biologics site in US for $50 mln
* US FDA tags Aurobindo Pharma arm's Telangana unit voluntary action indicated
* LIC's stake in Pfizer declines to 4% from 6% in May 2022
* US FDA accepts Dr Reddy's-Alvotech application for biosimilar of Denosumab
* Zydus Life gets US FDA final OK to manufacture advanced prostate cancer drug
* Sun Pharma arm completes acquisition of Canada's Antibe for $3.15 mln
* IPO Alert: Allchem Lifescience files DRHP for INR 1.9-bln fresh issue, OFS
* US FDA tentatively approves Lupin's Amifampridine tablets
* Alkem Labs' arm Alkem Medtech inks pact to buy 100% stake in Bombay Ortho
* Zydus Life receives final approval from US FDA for Eluxadoline tablets
* Laurus Labs buys 83 mln shrs in KRKA Pharma for INR 833 mln via rights issue
* USFDA issues no observation to Zydus Life's facility in Gujarat
* USFDA issues no observation to JB Chem's mfg facility in Gujarat
 

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Alina Geogy

Edited by Akul Nishant Akhoury

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