The share price movements of pharmaceutical & healthcare companies remained under pressure on stock exchanges during the first quarter ended March 2018 on account of US FDA actions against top companies, stiff competition, price cuts and significant drop in profits of major companies during the first nine months ended December 2017. In line with other sectoral indices, the BSE Healthcare (BSEHC) index of 69 major companies declined by 11.1 per cent to 13,157.62 points as at the end March 2018 as against 14,799.42 points as at the end of December 2017. The BSE Sensitive index of 30 companies was also also moved down by 3.2 per cent to 32,968.68 points.
The BSEHC improved during January 2018 and reached at its peak level at 15,249.43 points on January 24, 2018. However, thereafter, it declined continuously and touched to its lowest 13,017.42 on March 23, 2018. Excluding few shares, several shares declined in the first quarter. Sun Pharmaceutical scrip declined by 13.2 per cent during the first quarter to Rs.495.40 from Rs.570.80 as on last day of December 2017. Similarly, Lupin scrip declined to Rs.736.40 from Rs.884.65, a de-growth of 16.8 per cent and Aurobindo Pharma by 18.9 per cent to Rs.557.25 from Rs.687. SPARC share declined sharply by 25.4 per cent to Rs.378.35 from Rs.506.90 on BSE.
Other major pharma shares like Alkem Laboratories, AstraZeneca, Cadila Healthcare, Cipla, GlaxoSmithKline, Glenmark Pharma, Granules, Indoco Remedies, Natco Pharma, Piramal Enterprises, Strides Shasun, Unichem Laboratories, Wockhardt and Vivimed Labs, also declined over 10 per cent during the first quarter ended March 2018. Claris Lifesciences was delisted.
However, few companies like Biocon, Eris Life, FDC, HCG, Ipca Laboratories, Jubilant Lifesciences, Merck, Panacea Biotec, Pfizer, Sanofi and Syngene shares moved up slightly, Biocon scrip improved by 10.6 per cent to Rs.594.20 from Rs.537.25 and Ipca scrip went up by 9.6 per cent to Rs.654,90 from Rs.597.65 as at the end of December 2017. Jubilant share improved by 6.6 per cent to Rs.839.80 and Merck shares by 16.7 per cent to Rs.1504.65.
The financial performance of leading 30 pharma companies was not upto the market during the first nine months ended December 2017 which impacted the share price movements adversely. The net profit of 30 leading companies declined by 37 per cent to Rs.12,313 crore first quarter of 2017-18 from Rs.19,833 crore in the similar period of last year. Even, the net sales were stagnant at Rs.127,484 crore as compared to Rs.128,475 crore. These growth rates adversely impacted investors sentiment during the first quarter ended March 2018.
Indian pharma majors have invested funds in R&D activities to overcome competition in the domestic and international market. These companies received higher approvals from US FDA during 2017 which stood at 304 ANDAs as compared to 201 ANDAs in the previous year. Indian companies managed to secured almost 36 per cent of total approvals by US FDA in 2017. This will help them to launch new products in US markets.
Though the Indian companies received higher approvals, the major key issue is of US FDA warning letters and stringent actions against quality. If the Indian companies overcome this problem successfully in the near future, then the exports will move upward in the profitable US market. This will increase exports and overall working with investors backing.