Share prices of most pharmaceutical companies plunged further yesterday on account of the finance ministry's decision to levy excise duty on MRP instead of ex factory price. Poor performances of some of the leading companies Aurobindo and Suven Life Sciences and lack of support from FIIs depressed the prices further.

There is an air of uncertainty in pharma industry circles on account of the forthcoming Union Budget, VAT implementation, large investment in R&D and impact of patent regime. The volatile movements during the last couple of days affected the overall sentiment. The listing of new pharma shares like Indoco at a very hefty premium or bonus announcement by Glenmark recently could not help out to improve sentiment.

The BSE Healthcare index opened slightly lower at 2664.05on January 17, from its previous close of 2666.61 on January 14. It went to day's highest level at 2702.31 in the morning session. However, the Healthcare index started downward and closed at 2642.90 with a loss of 23.71 points. However, the BSE Sensex improved by 20.25 points to 6194.07.

"The pharma stocks were affected as a result of overall negative sentiment in the BSE. Also, the industry is not happy with the government's notification to charge excise based on MRP. Apart from cement, sugar and media, all other stocks under performed. These are the pre-budgetary reactions and we have to wait till budget to see a major recovery in the market stand," said Hemen Kapadia, senior analyst at Morpheus Inc, a Mumbai-based investment advisory firm.

"In fact the market had over performed in the near past and is in the correction mode. Besides the market is not happy with the recent excise notification. The nine months results of the pharma companies will generally remain poor. It is learnt that Indian companies incurred huge expenditure in ANDA filings and R&D related activities," said Prashant Nair, analyst at Mumbai-based Motilal Oswal Securities.

Initially, Ranbaxy suffered severe setback on price front, but it improved by Rs 2.15 to Rs 1072.15. Major scrips like Aurobindo, Cipla, Dr Reddy, IPCA, Lupin, Sun and Wockhardt also suffered mild to heavy setback. During intraday, the scrips saw some support at lower level but that was not sustain upto the day's closing. Midcap companies also could not get support and drifted downward. MNCs like AstraZenca, Merck, Novertis and Pfizer also drifted down.

Some analysts expressed that the current ups and down trend in the share prices is not new for the market players and one should not call it as 'crash in market'. In fact, one can say that the correction was overdue for past few days and the prices will stabilize at reasonable level. Except few stocks, there will be good opportunity for investors to pick up undervalue stock at modest price. Several pharma companies positive financial working will be announced in next few days, which may assist to push market sentiment. However, few giants may suffer a setback due to lower exports on account of competition and heavy investments in R&D.