The Indian pharmaceutical stocks remained in limelight during the year 2013 despite quality problems, forex losses, interest burden and Drug Price Controlled Order (DPCO). The pharma stock moved up slowly but continuously during the year with better top line as well as profit growth. The investors shown strong support and received good appreciation during 2013.

The BSE Healthcare index of 16 leading pharmaceutical companies outperformed the BSE Sensex of 30 companies during 2013 and touched to its yearly high at 10,056.33 points on December 24, 2013 on account of new product launch, higher exports, higher investment in R&D and satisfactory financial working. BSE Healthcare improved by 22.6 per cent and closed at 9966.26 as at the end of December 2013. BSE Sensex moved up by 8.9 per cent and close at 21170.68.

BSE Healthcare index touched to yearly high level at 10056.33 on December 24, 2013 and yearly low level at 7718.58 on March 1, 2013. BSE Sensex moved up to 21,483.74 points as yearly highest level on December 9, 2013 and lowest of 15534.47 on January 2013. Thus the investors received good appreciation during the full year 2013 from healthcare segment.

The major scrips like Ranbaxy Laboratories, Wockhardt, Strides Arcolab and Jubilant Life Sciences scrips were very volatile during the year due to warning letters from US FDA. Wockhardt declined and close at Rs.452.35 as at the end of 2013 as compared to last year closing of Rs.1577. Ranbaxy moved down to Rs.453.10 as against Rs.502.75 and Strides went down to Rs.359.95 from last year closing of Rs.1096.25 due to divestment of its Agila Specialties division to Mylan Inc. Multinational pharma companies exhibited mixed trend during 2013.

Dr Reddy's Laboratories scrip moved up to Rs.2540 as compared to Rs.1828.50 as at the end of 2012. Ajanta Pharma, Apollo Hospitals, Aurobindo Pharma, Sanofi India, Biocon, Divi's Laboratories, GlaxoSmithKline Pharma, Ipca Laboratories, Lupin, Natco Pharma, moved forward significantly. However, few pharma scrips like AstraZeneca, Cadila Healthcare, Dishman Pharma, Elder Pharmaceuticals, Jubilant Life Sciences, Merck, Novartis India, Orchid Chemicals, Panacea Biotec, Parenternal Drugs, etc received setback and declined as compared to closing prices of previous year.

The scrips like Ankur Drugs, Parabolic Drugs, Surya Pharma, Twilight Litaka, etc., were quoted below par. Dr Datsons Labs (formerly known as Aanjaneya Life) declined sharply and close at Rs.73 on BSE from previous year close of Rs.758.9. Ind-Swift dipped to Rs.7.91 from Rs.12.85 in the last year. Opto Circuits lost heavily and closed at Rs.28.10 as against 107.15. The share price movements of Plethico Pharma and Shasun Pharma were also under pressure.

The exchange rates were also volatile and Indian rupee closed at Rs.61.77 as at the end of December 2013 against US Dollar as compared to Rs.54.69 at the end of 2012. Further, Rupee was at 85.04 against a Euro as compared to Rs.72.23 in the previous year.

New Drug Price Control Order (DPCO), stockists and margins problem in the domestic market, US FDA warnings letters to few players, limited outcome from R&D investments, foreign exchange losses and interest burden may put pressure on bottom line of pharmaceutical companies in the current year. However, new product launches in US and Europe region by leading companies, loss of exclusivity and overall export growth assisted help to pharma players.

The rupee depreciation against US dollar and other international currencies may push price realisation in the current year. Further, cost cutting measures in US under healthcare reforms, and austerity measures in Europe will boost demand for Indian cost effective products. The trend is likely to continue in coming year. Investments in foreign subsidiaries and acquisitions in international region in the last few years assisted well to tap profitable highly regulated market.

Recently, GlaxoSmithKline Pte Ltd, a Singapore based subsidiary of GlaxoSmithKline Plc., has decided to increase its stake in GlaxoSmithKline Pharma (GSK), India by 24.33 per cent by acquiring 20,609,774 equity shares from the public shareholder through voluntary open offer. Similarly, Fresenius Kabi Oncology Ltd, (formerly known as Dabur Pharma Ltd), a Rs.490 crore plus pharma major, has decided to delist its shares from BSE and NSE as its holding company, Fresenius Kabi (Singapore) Pte Ltd (Acquirer), has acquired remaining 19 per cent equity share capital (30,063,255 shares) of Re 1 each from public shareholders at a price of Rs.130 per share.

Strides Arcolab has completed sale of its Agila Specialties division to Mylan Inc for a total consideration of up to US$ 1.75 billion. Consequent to the warning letter received by the company for one of its units in Bengaluru, Strides has agreed to a hold back of US$ 250 million, which will be contingent upon satisfaction of certain regulatory conditions related to the injectable facilities in India.

Torrent Pharmaceuticals, a Rs.3,000 crore plus Ahmedabad based pharma giant, has entered into a definitive binding agreement with Elder Pharmaceutical to acquire its branded domestic formulations business in India and Nepal for a consideration of about Rs.2,000 crore. Elder's India business comprises a portfolio of 30 brands including market leading brands in the women's healthcare, pain management, wound care and nutraceuticals therapeutic segments.

The US Food and Drug Administration (FDA) has issued an import alert on Wockhardt's Chikalthana plant, Aurangabad in Maharashtra. An import alert effectively means a ban. This is the company's second plant in India to get import alert after Waluj. The US regulator had inspected the Chikalthana plant, hit by the latest regulatory action, in July and had made some observations about the manufacturing practices.

In May this year, the FDA imposed ban on the Waluj plant of Wockhardt after inspectors found torn data records in a waste heap and urinals that emptied into an open drain in a bathroom six metres from the entrance to a sterile manufacturing area.

Ranbaxy Laboratories with net sales of Rs.12,252 crore, has suffered heavy setback during the third quarter ended September 2013 due to lower sales in US and Europe. The company received an 'import alert' on September 16, 2013 from US FDA on one of its manufacturing unit located in Mohali. Due to Mohali stock write off the company incurred a loss of Rs.69.51 crore. Further, it's foreign exchange loss amounted to Rs.302.21 crore as against gain of Rs.393.33 crore in the same period of last year.

Supreme Court has dismissed patent plea of Novartis AG for its cancer drug Glivec during April 2013. While rejecting Novartis plea, the Supreme Court said that the patents would be granted only for genuine inventions. Novartis filed case way back in 2006 for a fresh patent in India for its cancer drug imatinib mesylate when the Indian patent office rejected the same. This verdict will allow several Indian companies like Cipla, Natco and others to offer cost effective generic version in the Indian market.

Jubilant Life Sciences has received a warning letter by US FDA for its manufacturing facility, Jubilant HollisterStier General Partnership (JHS) located at Kirkland, Quebec, Canada, identifying significant violations of current Good Manufacturing Practices (cGMP) Regulations during February 2013.

The new DPCO which came into effect from May 15, 2013 replacing the 1995 Order puts the mechanism for regulating the prices of 348 drugs, instead of 74 drugs, based on the simple average of market price of a product. Industry insiders believe this is one of the first initiatives taken by the National Pharmaceutical Pricing Authority (NPPA) for fixing the ceiling price of the 348 formulations based on market based pricing after the notification.

Considering the first half financial performance and higher approvals for ANDAs from US FDA, higher filings of DMFs and investments in foreign subsidiaries the outlook for the current year looks positive for Indian pharma companies.