The BSE Healthcare (BSEHC) index of 16 major companies was under pressure during the first quarter ended March 28, 2014 on account of quality issues. Further, firming up of Indian rupee against US Dollar also put pressure, as several pharma companies are exporting over 50 per cent of their sales in regulated markets.
BSEHC improved only by 0.5 per cent during the quarter ended March 28, 2014 to 10072.73 points as against 10018.73 points as at the first day closing on January 2014. However, BSE Sensex of 30 companies moved up strongly by 5.8 per cent to 22339.97 points from 21140.48 points as at the start of 2014 on account of significant growth in shares of banking, auto and metal segments.
The US FDA warning letter and action against Ranbaxy, Wockhardt and Sun Pharmaceutical has impacted the investor sentiment adversely. After Ranbaxy and Wockhardt, US FDA has issued warning letter to Sun Pharmaceutical, a Rs.11,200 crore plus second largest Indian pharma major, for its cephalosporin facility located at Karkhadi, Gujarat in India. Though the contribution of this facility to Sun Pharma’s consolidated revenues is negligible and the company maintains its FY2013-14 consolidated sales growth guidance, the US FDA action impacted its share price which closed at Rs.563.50 on March 28, 2014 as against its 52-weeks highest of Rs.653.10 on March 3, 2014.
Out of Pharmabiz 20 leading pharma scrips, 14 scrips reached yearly highest level during January-March 2014. BSEHC touched to its yearly highest level at 10893.18 points on March 3, 2014 and lowest at 9886.24 on January 3, 2014. The current exchange rate of US Dollar reached at Rs.60.08 as compared to Rs.61.77 as at the close of December 2013. If the firming up of Indian rupee will continue on account of expected change in central government, the exports of pharma segment will under pressure and impact profitability.
Few scrips like Aurobindo, Cadila Healthcare, Jubilant Lifesciences, Divi's Laboratories, Torrent Pharmaceuticals and Ipca Laboratories surged smartly over 10 per cent during the period January-March 2014.
Ranbaxy, which is under US FDA scanner, reached at its yearly highest level at Rs.490.15 on January 6, 2014 but declined to Rs.364.05 as on March 28, 2014. Ranbaxy scrip declined by 19.7 per cent during January-March 2014.
GlaxoSmithKline (GSK) scrip reached at yearly highest level at Rs.3054.50 on March 3, 2014 and then declined to Rs.2589.10 on March 28, 2014 after its buy back offer. GlaxoSmithKline plc (GSK) has increased its stake in Indian arm GlaxoSmithKline Pharmaceuticals, from 50.7 per cent to 75 per cent. GlaxoSmithKline Pte Ltd has accepted 20,609,774 shares from the shareholders of GSK, representing 24.33 per cent of the total shares outstanding through the Open Offer of Rs.3,100 per share.
Lupin scrip increased by 4.2 per cent during the last three months and closed at Rs.947.15 on March 28, 2014 from the close of Rs.908.60 as at the end of December 2014. The scrip touched to its yearly highest level at Rs.1003 on March 3, 2014. Recently, the company acquired 100 per cent equity stake in Laboratorios Grin, S.A. De C. V. (Grin), Mexico. The acquisition marks Lupin's foray into the high growth Mexican and the larger Latin American pharmaceuticals market. Mexico is one of the faster growing pharmaceutical markets in the world valued at over US$ 13.5 billion and growing at 9-10 per cent annually.
Dr Reddy's Laboratories share price improved by 3.3 per cent during the last three months and closed at Rs.2617 as on March 28, 2014. DRL scrip touched to its 52-weeks highest level at Rs.2939.80 on February 28, 2014. The company recently launched amlodipine besylate and atorvastatin calcium tablets, a therapeutic equivalent generic version of Caduet (amlodipine besylate and atorvastatin calcium) tablets, in the US market.
Glenmark Pharmaceutical scrip also improved by three per cent to Rs.549.20 during the last three months as it received US$ 4 million through its Swiss subsidiary as research fee payment from Forest Laboratories Inc. on a collaboration for the development of novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain. Forest made $6 million upfront payment and also provided an additional $3 million to support the next phase of work.
During the quarter ended March 2014, other scrips like Cipla, Biocon, Dishman and Novarits were under pressure and declined. However, Sanofi India scrip reached at its yearly highest level at Rs.3033.34 on March 28.
Share price movements of 20 pharma companies