The Bombay Stock Exchange healthcare index of 17 leading pharmaceutical companies has outperformed BSE Sensex of 30 companies during August 2014. BSE healthcare index improved sharply by 8.2 per cent and closed at 13356.87 as compared to12341.28 as at the end of July 2014. The healthcare index touched to yearly high level at 13528.89 on August 27 as against its yearly low level of 9886.24 on January 3, 2014. Several pharma scrips touched to their yearly high level during August 2014. The healthcare index moved up continuously during the month with better financial performance, dividend payouts, higher spending on R&D and regulatory approvals.
The BSE Sensex reached all-time high at 26674.38 on the last trading day of August 2014 and closed at 26638.11 points as compared to 25894.97 points as at the end of July 2014.
The major shares like Sun Pharmaceuticals, Lupin, Cipla, Aurobindo Pharma, Cadila Healthcare, Glenmark Pharma, Torrent Pharma, Shasun Pharmaceuticals and Granules India moved up by over 7 per cent during August. Similarly, multinational companies like Ranbaxy Laboratories and Abbott India moved up smartly. Few shares like Jubilant Life Sciences, Biocon, Ajanta Pharma, Sharon Bio-Medicine, Strides Arcolab, GlaxoSmithKline Pharma and Novartis remained subdued during the month. Further, Unichem Laboratories, Sanofi and Dr Reddy's Laboratories scrip have not shown major change in price. The multinational companies shares were under pressure mainly due to DPCO 2013 impact.
The pharma major like Sun Pharma scrip reached at its peak level at Rs. 875 on August 26 followed by Lupin, Dr Reddy's Labs, Cipla, Aurobindo, Cadila Healthcare, Glenmark, Torrent Pharma, Divi's Laboratories, Ajanta Pharma, Shasun Pharma, Granules India, Sharon Bio-Medicine, etc. Multinational pharma like Ranbaxy, Abbott India, Novartis, Fulford India and Wyeth also moved up substantially and touched to yearly high level during August.
However, Sun Pharma and Ranbaxy received notice from Competition Commission of India (CCI) to make public details of their proposed merger transaction in a “prescribed formant” within 10 working days. This put pressure on share price of Sun and Ranbaxy on August 28, 2014.
Sun Pharma, the leading Indian pharma company with net sales of Rs. 16,000 crore plus, has registered a net profit of Rs. 1,391 crore during the first quarter ended June 2014 as against a net loss of Rs. 1,276 crore in the corresponding period of last year. The company provided Rs. 2,517 crore towards settlement for patent infringement litigation related to generic versions of 'Protonix' during the previous year quarter ended June 2013.
However, Cipla and Wockhardt received setback during the first quarter ended June 2014 and their net profit was under pressure. Cipla's net profit declined by 39.2 per cent to Rs. 295 crore from Rs. 485 crore and Wockhardt net profit declined by almost 94 per cent to Rs. 19.95 crore. Aurobindo Pharma has posted impressive performance due to acquisition of Western European business of Actavis, higher sales, foreign exchange gains against loss in the corresponding period of last year. The company management declared interim dividend of 150 per cent i.e. Rs. 1.50 per share of Rs. 1 each.
Ajanta Pharma, a Rs. 1,079 crore Mumbai-based pharma major, has posted strong growth in net profit of 80.5 per cent to Rs. 58.72 crore during the first quarter ended June 2014 from Rs. 32.54 crore in the corresponding period of last year. Its net sales also moved up by 30.4 per cent to Rs. 280.79 crore from Rs. 215.39 crore. Its equity capital increased to Rs. 17.68 crore from Rs. 11.81 crore in the last period due to bonus issue.
Recently, Cipla Ltd has signed a definitive agreement to acquire a 51 per cent stake in a pharmaceuticals manufacturing and distribution business in Yemen (in turn owned by a UAE based parent company) and collaborated with Hetero to launch a biosimilar of the drug ‘Darbepoetin alfa’ under the brand name ‘Actorise’. In June 2014, Strides Arcolab received ANDA approval from the US FDA for its imiquimod cream, which according to IMS data, has a market of approximately US$ 140 million in the US.
Ohm Laboratories, Inc. (Ohm), a wholly owned subsidiary of Ranbaxy Laboratories has received approval from the US FDA to manufacture and market Valsartan 40 mg, 80 mg, 160 mg, and 320 mg tablets on an exclusive basis. Valsartan is indicated for the treatment of high blood pressure and heart failure. Granules India Ltd, a fast growing pharmaceutical manufacturing company, announced its paracetamol facility successfully passed a US FDA inspection without any 483 observations.
CRISIL has stated in its report that the capital expenditure (capex) of India's top 20 pharmaceutical companies, which contribute nearly two-third of the country's exports, may increase by40 per cent to over Rs. 50,000 crore by fiscal 2018, compared with about Rs. 30,000 crore seen in the last four fiscals with more and more focus on the regulated markets. The significant patent expiries and ever-increasing demand for generics from regulated markets will require higher investment in capex. Thus the financial performance, more and more approvals and higher expectation of capex boost he investors sentiment during August 2014.
Share price movements during Aug 2014