Pharmaceutical shares experienced some support from investors during the last week of September 2007 despite appreciation of rupee against the US dollar. The BSE Health Care (BSEHC) index of 23 leading companies improved by 5.9 per cent on the last trading day of September 2007 to 3784.21as compared to 3572.82 as at the end of August 2007. Though, the BSE Sensex improved by 12.9 per cent during last one month to 17,291, the BSEHC was under performed and moved only by 5.9 per cent. The volatile movements put pressure on overall price movements in pharma segment.

The market continues to be under the bull grip with sustained foreign inflow and improvement in other Asian indices as well US indices. Foreign Institutions were on a buying spree with investment of over Rs 12,000 crore during last few trading sessions. A leading pharma analyst said that the rupee exchange rate is going to be major factor that may determine pharma shares. The September quarter results will not likely to give any assistance to current price level with exports under pressure. The profit is likely to fall in the range of 10 to 15 per cent. Further, the government policy regarding price control will also put pressure.

The Indian rupee was quoted at Rs 41.17 against US Dollar as at the end of August 2007 and then firmed up further to Rs 39.74 as at the end of September 2007 with touching to 39.61 during the month.

The Organisation of Pharmaceutical Producers of India recently said that the Government decision to expand the drug price control list will impact future investment in the sector. The Centre intends to bring 354 medicines on the National Lists of Essential Medicines under price control. Further, the denial of patent to Novartis Glivec also dampens the positive outlook which India is enjoying with huge market size, the analyst said.

Considering the dismal show during the first eight months of the 2007 by pharma scrips, improvement during the end of September is quite satisfactory. During the first eight months of the 2007 (January-August 2007), the BSEHC declined by 5.8 per cent to 3573 from 3792 points as at the end of 2006. However, the share price of leading pharma companies started moving up last week of September with higher approvals from US FDA and boost in CRAMS activities.

The leading scrips from BSEHC like Ranbaxy, Cipla, Orchid Chemical, Novartis Wockhardt and Panacea Biotec moved up by more than 5 per cent during September 2007. Opto Circuit went up due to announcement of bonus share and Glenmark was quoted at Rs 421 due to split of share from Rs 2 to Rs 1 recently. Divi's Lab also split its share to Rs 2 each.

Ranbaxy share moved up 11 per cent during the month to Rs 434 from Rs 391 as at the end of August 2007. Dr Reddy's scrip, however, receiving selling pressure and improved only by 1.3 per cent to Rs 649 as against Rs 640 during the one month. Cipla shares moved close to 52 weeks lowest level of Rs 160 and regain to current level of Rs 182. The share price of these leading companies was under pressure mainly due to adverse exchange rates.