The BSE Healthcare index of 69 pharmaceutical companies declined sharply by 12.88 per cent to 14,727.59. points as at the end of December 30, 2016 from previous year closing of 16,905.20 points due to continuous US FDA actions against pharma majors, volatile exchange rates, stiff competition, limited outcome of R&D investments and Drug Price Controlled Order (DPCO). Similarly, NSE Pharma index of ten companies also declined by 14.2 per cent to 10,267 points from 11,963.50 points in the previous year end at December 31, 2015. Investors sentiment impacted severely and several pharma stock were hovering around there yearly lowest level.

According to pharma analyst from broking firm, the pharma stocks were under pressure and could not received much expected investors support due to uncertainty and outcome of US FDA actions. Several companies like Sun Pharmaceuticals, Dr Reddy's Laboratories, Divi's Laboratories, Lupin, Cipla, Wockhardt, Smruthi Organics, Alkem Laboratories, Torrent Pharma, Caplin Point Laboratories, etc., received warning letters or few observations regarding quality and procedures of products.

Despite gloomy investor sentiment, few pharma majors scrips like Ajanta Pharma, Biocon, Claris Lifesciences, Hikal, J B Chemicals, Jubilant Life Sciences, Merck, Neuland Laboratories, Piramal Enterprises, RPG Life, Shilpa Medicure, etc,  improved as compared to previous year closing. Ajanta Pharma scrip moved to Rs.1,776 as on last day of trading of 2016 as compared to Rs.1,336.60 in last closing day of 2015. Biocon moved up by 82.93 per cent and closed at Rs.947.70, Clalris up by 50% to Rs.320.05,  Jubilant Life by 52.32 per cent to Rs.625,  Piramal Enterprises by 61.89 per cent to Rs.1,621.05, RPG Life by 58.55 per cent to Rs.481.50 and Shilpa Medicare by 38.57 per cent to Rs.691.40. Further, Hikal, J B Chemicals, Merck, Neuland Labs scrips moved up in the range of 20-30 per cent during 2016.

The share price of Dishman Pharma, Divi's Laboratories, Ipca Laboratories, Kopran, Marksans Pharma, Morepen Labs, Necter Life, Sequent Scientific, SMS Pharma, Suven Life, Wockhardt, etc declined by over 30 per cent during one year ended December 2016. Alkem Laboratories and Syngene International entered the capital market during 2015 and received strong support from investors. Currently, Alkem is moving around Rs.1,623.65 and Syngen at Rs.561.90.  Capital Point Laboratories and Vivimed Laboratories split there face value of share from Rs.10 each to Rs.2 each during 2016.    

The investors sentiment impacted adversely due to increased inspections by US FDA. “With growing competition across the globe, naturally India being the holder of largest US FDA complaint manufacturing units, it will have to face regulatory inspections and definitely such warning letters are common. However, it will further resolve our commitment to strengthen our standards and help us keep a head of global players,” opined an industry expert over rising instances of US FDA inspections on Indian manufacturing units.  There has been a rise in the number as well as the stringency of US FDA inspections in recent years post implementation of GDUFA. In 2015 US FDA inspected 240 drug manufacturing facilities in India; this was approximately 2.5 x the number of facilities inspected in 2010.

The financial working of leading 30 pharma companies during the first half ended September 2016 was not upto the mark and impacted investors sentiment. The Pharmabiz  study of 30  top Indian pharma companies in the first half of the  current year clearly reflects adverse trend. The sales of these 30 companies  account  for almost 75 percent of  sales of Pharmabiz study of 100 companies during 2015-16.The growth in top line as well as bottom line of several companies remained  single digit or negative during first half of 2016-17.

The net sales of 30 Indian pharma companies increased only by 9.4 per cent to Rs.87,197 crore during the first half ended September 2016 from Rs.79,684 crore in the corresponding period of last year and earnings before interest, depreciation, tax and adjustments (EBIDTA) improved marginally by 8.2 per cent to Rs.23,394 crore from Rs.21,628 crore. The other operating income of these companies moved up sharply by 32 per cent to Rs.2,097 crore from Rs.1,590 crore, which aided to push EBIDTA growth.  Thus the financial performance is also impacted the BSE Healthcare movements.

Though the financial working was under pressure during 2016, the investments in R&D activities may give boost to presence in highly regulated markets and overall business. Up to December 23, 2016, US FDA approved total 549 ANDAs and Indian companies received 198 approvals which worked out to almost 36 per cent of total approvals. Aurobindo Pharma received highest number of 56 approvals during 2016 followed by Glenmark 18, Lupin and Macleods Pharma 11 each. During 2015, US FDA approved 564 ANDAs and Indian companies received 167 final approvals. .

The overall outlook for early part of 2017 is not looking promising one with demonetization impact on overall business, US FDA actions and competition. However, lower interest rates may help pharma companies to invest more on R&D activities. The focus on emerging market and new product launch may give necessary push to revenues and profits during 2017.