The Bombay Stock Exchange Health Care (BSEHC) index of 21 pharmaceutical and healthcare companies moved up sharply by over 88.3 per cent during the fiscal year ended on March 31, 2010. The BSEHC index closed at 5328.37 points as at the end of 2009-10 as compared to 2830.11 points year ago. The index gained strong support from investors and touched to its 52-weeks highest level at 5378.26 on March 26, 2010 as against its lowest of 2787.70 on the last day of 2008-09. Key factors like strong financial performance on quarter to quarter basis, higher products approvals, and spreading of activities in other markets assisted upward share price movements. Further, investors sentiment improved with recovery in world economy and also passing of Health Care Bill in US congress.
The BSE Sensex of leading 30 companies also moved up by 80.5 per cent to 17527.77 points at the close of 2009-10 from 9708.50 points an year ago. The Sensex reached at its yearly peak level at 17793.01 points on March 29, 2010 as against its lowest of 9546.29 on April 1, 2009.
According to analysts, the pharmaceutical scrips will give better returns to investors in the current year also as the required infrastructure is in place and players are investing and adopting norms of the highly regulated markets. Fluctuations in exchange rates, drug price control and patent policy, and stiff competition may put some pressure on working, but the Indian pharma segment is likely to overcome these odds successfully.
Almost all the pharma scrip are currently hovoring around their yearly highest level. Aurobindo Pharma scrip closed at Rs 958.50 on March 31, 2010 as compared to Rs 188.15 year ago, a growth of 410 per cent. Cadila scrip also moved up by 203 per cent to Rs 825, with the announcement of bonus issue in the ratio of 1:1, as against Rs 272.10 at the close of last fiscal year. Dr Reddy's scrip reached at Rs 1276.80 as compared to Rs 488.66 and GlaxoSmithKline at Rs 1777.85 from Rs 1088.05 at the end of March 2009. Lupin also jumped to Rs 1617.50 from Rs 689.20 year ago. Ranbaxy, Sun Pharmaceuticals, Torrent Pharma, Piramal Healthcare, Jubilant Organosys, Dishman Pharma, etc scrip also gained significantly during 2009-10.
As per the Pharmabiz study, the results of 25 leading pharma companies, with consolidated net sales above Rs 500 crore and year ended in March, achieved a growth of 11.9 per cent during the first nine months ended December 2009 to Rs 41,619 crore from Rs 37,185 crore in the corresponding period of last year. The net profit of 25 companies after considering foreign exchange loss or gain, improved by 30.8 per cent to Rs 5,498 crore during the nine months period ended December 2009 from Rs 4,202 crore in the corresponding period of last year. Based on these results, the pharmaceutical companies are well set to achieve better growth in top line as well as bottom line during 2009-10.
The R&D expenditure of the top 25 pharma companies have thus increased by almost 17 per cent at Rs 3210 crore during 2008-09 from Rs 2,747 crore in the previous year. The R&D expenditure as per cent of their standalone net sales worked out to 7.75 per cent in 2008-09 as compared to 7.60 per cent in the previous year. Several companies are continuing to invest higher amounts in R&D to tap opportunities coming up with the expiration of patents in near future. Further, tie-ups and alliances in R&D activities has been gone up during the first nine months of the current year. The clinical trial segment of R&D activities is also increasing in the country.
With better performance, the pharma players are likely to step up dividend payment for the year 2009-10. So far, MNCs have declared handsome dividends during 2009 and 2008. AstraZeneca recommended equity dividend of 500 per cent (previous year 750 per cent), Aventis Pharma, Merck and Solvay Pharma declared equity dividend of 200 per cent, GSK 300 per cent (400 per cent), Abbott India 170 per cent (140 per cent) and Fulford 45 per cent (20 per cent) for the year ended December 2009.