Pharma shares nose-dived sharply in line with BSE-Sensex yesterday on account of heavy selling pressure caused by falling rupee, lack of buying support from foreign institutional investors and adverse UK court ruling in Ranbaxy-Pfizer tussle on Lipitor patents.
The BSE Healthcare Index declined by 49 points in one day to 2977 from closing of 3027 on October 13. Ranbaxy suffered a set back and its shares went down by Rs 15 to Rs 443 on account of adverse decision by UK court in respect of Lipitor patent. Other pharma majors like Aurobindo, Biocon, Divi's Lab, Lupin, Nicholos Piramal and Wockhardt also came down heavily due to selling pressure. Out of 23 shares in the BSE Healthcare Index, only four counters moved up and 19 shares declined significantly
The trading was marked by distress selling by investors and lack of foreign institutional buying support. The FIIs turned sellers, with falling rupee in terms of US dollar. The London court verdict against Ranbaxy, however, did not affect Dr Reddy's Laboratories, which moved up by 8 points to Rs 905 from previous day's closing of Rs 897. The analyst pointed out that the company would achieve significant improvement in working in the second quarter ended September 2005.
The BSE Healthcare Index touched to its 52 weeks peak level at 3177.52 on October 7, 2005. However, within a week, the index moved down to current level at 2978, a fall of 200 points, a fall of 6.3 per cent. Though, Orchid Pharma achieved excellent financial performance with hefty rise of 578 per cent in bottom line for the second quarter of current year, the share price could not moved up and dwindled by almost 7 per cent to Rs 269. Lupin declined by Rs 26 to Rs 764, Divi's Lab by Rs 52 to Rs 1433, Wockhardt and Aurobindo moved down by Rs 11 each to Rs 489 and Rs 338 respectively
The slow growth in export earnings, falling rupee, adverse legal impact, stiff competition in international markets and lack of FIIs support put pressure on price movements. However, pharma analyst pointed out that the Indian companies have created strong product pipeline and set to grab more market share in the international area. The significant rise in the R&D investment will boost the earnings in short time and pharma shares will bounce back. The BSE Sensex also declined by 175 points to 8201.73.