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Informist, Friday, May 2, 2025

MUMBAI – Shares of pharmaceutical companies are likely to remain in a narrow range next week in the absence of major triggers from domestic and global markets, analysts said. There has been some ease in worries as the US has not yet announced tariffs on pharmaceutical imports, which is among the major sectors that would take a major hit if the US imposes any levies. US President Donald Trump had earlier said that he would announce a 25% tariff on pharmaceutical products, but then announced a 90-day pause on most countries, barring China. 

Nirmal Bang Institutional Equities initiated coverage on 18 Indian pharma companies, with a 'buy' rating Cipla, Sun Pharmaceutical Industries, Eris Lifesciences, and JB Chemicals and Pharmaceuticals. It also initiated a 'hold' rating on 14 other pharma companies. "We hold a favourable view of the Indian BRx (branded generics) segment due to several structural advantages: high physician prescription stickiness, better growth visibility, a lean working capital cycle (around 45 days), and healthy return ratios and margins," the broking firm said in a report Friday. 

Volume growth remains uncapped and new product approvals are relatively faster and less complex, Nirmal Bang said. The broking firm also said that India's pharma market is currently valued at around $50 billion and has delivered a 10% compound annual growth rate between 2007-08 (Apr-Mar) and FY23. It is expected to grow at a compound annual growth rate of 9.6% through FY28, it said. 

However, the generics business remains volatile and earnings visibility is limited. The implementation of the US Inflation Reduction Act, set to take full effect post-2026, is expected to structurally cap pricing and increase compliance costs, thereby impacting long-term profitability, Nirmal Bang said. Factors which continue to put pressure on return ratios in the US generics business include high capital expenditure requirements for manufacturing and research and development, and stretched working capital, it added. 

On the earnings front, pharma is expected to be among the few sectors that would post strong results in the March quarter. No pharma companies, which are part of the Nifty 200 universe, have released their results so far. Biocon is scheduled to release its quarterly results on Tuesday. The company is likely to report nearly 25% on-year growth in its consolidated net profit to INR 1.69 billion and a 5% increase in revenue to INR 41.20 billion, according to the average of estimates from six brokerages. Sequentially, the bottom line is seen rising a whopping 573% and the top line is seen increasing nearly 8%. 

Pharma companies that are yet to declare the date of their results include Sun Pharmaceutical Industries, Divi's Laboratories, Aurobindo Pharma, Zydus Lifesciences, and Glenmark Pharmaceuticals. 

TOP HEADLINES
* Ajanta Pharma Jan-Mar consol net profit rises over 11% YoY to INR 2.25 bln
* Gland Pharma gets US FDA nod for latanoprostene bunod ophthalmic solution
* Zydus Life gets final nod from US FDA to manufacture Niacin tablets
* Glenmark Pharma clarifies medicines flagged by drug regulator are fake
* Alembic Pharma says US FDA clears Panelav oncology unit in Gujarat
* Fire at Aurobindo Pharma arm's Kakinada Penicillin-G unit halts operations
* Dr Reddy's in pact with Sanofi for Beyfortus injection in India
* EU regulatory panel OKs Biocon arm to market Vevzuo, Denosumab BBL drugs
* European regulatory panel OKs Aurobindo Pharma arm to market Dazublys drug
* Zydus Life gets six observations from US FDA for Dabhasa mfg unit

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 Anjana Therese Antony
Edited by Saji George Titus

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