Though the several sectors of the economy are experiencing volatile movements during last week ended September 25, 2009 on Bombay Stock Exchange (BSE), the pharma scrip of BSE Health Care (HC) index received strong buying support and outperformed BSE Sensex. The HC index of 21 major pharmaceutical companies notched up strong growth and touched to its 52-weeks new high level at 4321.79 points on September 25. The HC index jumped by 5.3 per cent or 217.90 points on Friday to close at 4309.79 points as against previous day close of 4091.89 points. All most all pharmaceutical companies scrip moved up significantly during the week.
The Bombay Stock Sensex of 30 companies, however, declined by one per cent on Friday to 16,693 points from its previous day close of 16781.43 points. The Sensex declined by 0.3 per cent during the week ended September 25, 2009. The Sensex touched to its yearly high level at 16943.49 on September 22 on account of buying support from foreign financial institutions.
Pharma majors like Ranbaxy Laboratories, Dr Reddy's Laboratories (DRL), Aurobindo Pharma, Biocon, GlaxoSmithKline (GSK), Lupin, Piramal Healthcare, Sun Pharmaceutical, Aventis Pharma etc., grabbed new yearly highest level on September 25 2009 on account of buying support. DRL scrip moved up by Rs 93.65 to Rs 985.85 and touched to its 52-weeks peak level at Rs 1001, GSK's price moved up by Rs 98.20 on Friday to Rs 1578.30 with yearly high of Rs 1601.90 and Sun Pharmaceutical went up by Rs 86.25 to Rs 1311 and Aventis by Rs 79.20 to Rs 1533.50. Besides, MNCs and several other mid-cap pharma scrips received good support from investors.
The strong buying support from Foreign Financial Institutions (FIIs) gave momentum and aided the investment sentiment. Till September 25, the net investment of FIIs in Indian markets amounted to Rs 16,394 crore. The analyst pointed out that the several Indian firms issued FCCBs to reduce their borrowings or financing their expansion as well as acquisition amount. Recently, Glenmark raised Rs 413 crore mainly for reduction of its debt burden.
The news reports regarding acquisition plans of few important pharma companies by multinational companies also assisted the rally in pharma shares. Indian companies will be in the limelight as several highly regulated countries, including US, are taking steps to reduce their healthcare cost. The cost effective pharma products from Indian companies will in demand in near future. The news of improvement in economic condition in US also assisted the overall sentiment.
The pharma analysts pointed out that the pharma companies will be in a position to improve their growth in top line as well as bottom line in the quarter ended September with more approvals and launches of new products. Aurobindo Pharma received US FDA approval for Risperidone oral solution 1mg/ml. The product is generic equivalent to Risperidal oral solution 1mg/ml of Ortho-McNeil Janssen. Similarly, Aurobindo has also received two approvals from Swissmedic, Government of Switzerland for the license of amlodipine APL 5 mg and 10 mg tablets and metformin APL 500 mg, 850 mg and 1000 mg tablets.
Further, Matrix has received tentative US FDA approval for HIV/AIDS drugs and Orchid Chemical has got approval for piperacillin and tazobacfam. Suven Life Sciences announced that their drug discovery collaboration in central nervous system (CNS) disorder with Eli Lilly yielded a positive outcome with lead declaration leading to a milestone payment to Suven. Anuh Pharma, a Mumbai-based Rs 120-crore plus pharma company, has been successfully inspected by European Directorate for the Quality of Medicines & HealthCare (EDQM). Natco Pharma launched generic version of Tamiflu in India. These developments helped to generate higher investors interest in the pharma scrips during September 2009.