The overall operating performance of Indian pharmaceutical companies improved during the year 2011-12 and has helped BSE Health Care (BSEHC) index to outperform BSE Sensex during the first five months of 2012. BSEHC of 19 leading pharmaceutical companies closed higher at 6645.31 points as at the end of May 31, 2012 from 5870.52 points at the end of 2011, recording a growth of 13.2 per cent. However, Sensex of thirty companies moved only by 4.9 per cent and closed at 16218.53 points as at the end of May 2012. The BSEHC reached at its peak level at 6878,53 points on April 20, 2012 as against its lowest at 5835.48 points as at the start of 2012.

In line with world indices, the BSE Sensex declined sharply by 253 points on June 1, 2012 to 15965.16 points. The BSEHC index also moved down by 88.35 points to 6556.96 points on June 1. The disappointing economic indicators, rupee depreciation against major currencies, lack of confidence and poor sentiment may put pressure on price movements in coming weeks.

Sun Pharmaceutical has highest weight-age of 17.76 per cent in the BSEHC followed by Dr Reddy's Laboratories (DRL) 16.24 per cent, Cipla 12.21 per cent, Lupin 10.01 per cent and Ranbaxy Laboratories 6.60 per cent. Sun Pharma scrip moved up by 14.2 per cent during January-May to Rs. 567.50, DRL by 6.4 per cent to Rs. 1690.75 and Ranbaxy by 27.6 per cent to Rs. 517.15 as at the end of May 2012.

Sun Pharma, DRL and Cipla announced strong growth in top line as well as bottom line during 2011-12. DRL scrip slowly went up by 6.4 per cent to Rs. 1690.75, but Cipla scrip declined to Rs. 309.65 from Rs. 319 as at the first trading day of 2012. Lupin achieved sales growth of 22 per cent and EBDITA growth of 21.6 per cent and the share price went up by 21 per cent to Rs. 539.40. However, the EBDITA and net profit growth of Ranbaxy was under pressure due to quality problem with US FDA, but its Q1 performance was improved significantly.

Further, Divi's Laboratories with weightage of 4.69 per cent and Glenmark of 4.01 have also recorded strong EBDITA growth. Divi's scrip jumped to Rs. 935.25 on last day of May 2012 from Rs. 775.35 as on the first day of trading of 2012, a growth of 21per cent. Further, Wockhardt with weight-age of 1.97 per cent in the BSEHC index and Ipca Laboratories with 1.78 per cent announced impressive growth in sales and profits.

The overall increase in approvals for ANDAs from US FDA, higher filing of DMFs by Indian pharma players and launch of new products in regulated and emerging markets will give necessary boost to operations in the current year. The Government policy in respect of foreign direct investment by multinational companies in the pharmaceutical segment as well as protection from intellectual property will play key role in future growth. Further, the economic problems in Europe and significant higher deficit in India may put some pressure on price movements of pharma stocks in current year.