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BSE Healthcare index jumps by 61.4% in 2020, Sensex up only by 15.8%
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Sanjay Pingle, Mumbai
January 05 , 2021
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The BSE Healthcare index of 72 pharma and healthcare related companies has taken a quantum jump of 61.4 per cent during the year 2020 and closed at 21,681 points on the last day of trading as against 13,429 points closed on December 31, 2020.
However, BSE Sensex of 30 companies improved only by 15.8 per cent to 47,751 points as compared to 41,253 points in the last year which impacted heavily due to Covid-19 pandemic. The Nifty Pharma index of 10 companies also improved by 60.6 per cent during 2020 to 12,916 points from 8,040 points.
The strong upward trend in share price is due to gradual recovery in the market demand across India and comprehensive product offering in US market. Higher returns from research and development investment turned into higher ANDA approvals and new launches. Though the market conditions were under pressure during the first half of 2020, the same improved slowly in the second half. The gradual recovery in the market demand across India and other international markets assisted well.
BSE Healthcare (HC) index opened at 13,429 points on January 1, 2020 and moved up to 14,535 points on February 20, 2020. However, the BSEHC index drifted thereafter and touched to yearly low level at 10,947.99 points on March 23, 2020 due to lockdown and fear of Covid-19. The index started moving upward and several pharma shares registered gain in every trading session. Major shares like Granules India, Solara, Neuland Labs, Strides Pharma Science, J B Chem, Wockhardt, Divi’s Laboratories, Aurobindo Pharma, etc., surged strongly and more than doubled during 2020.
Suven Life Sciences shares surged significantly by 332 per cent to Rs. 90.60 from Rs. 20.95 in the end of 2020 followed by IOL Chemicals and Pharma 325 per cent to Rs. 740.25 from Rs. 174.15, Marksans Pharma went up by 263 per cent to Rs. 60.65 from Rs. 16.71.
MNC shares like AstraZeneca and Pfizer were in limelight on account of research on Covid vaccine. AstraZeneca shares went up by over 76 per cent and closed at Rs. 4,621.45 as at the end of 2020. Similarly, Pfizer scrip moved up by 20.9 per cent to Rs. 5,107.70 and Abbott India surged by 20.6 per cent to Rs. 15,760.70. However, Glaxo Pharma and Novartis shares were under pressure and moved up slightly during 2020. Glaxo shares moved up only one per cent to Rs. 1,623 as at the end of 2020.
Apollo Hospital and Fortis Hospital shares increased by 67.3 per cent and 17.3 per cent to Rs. 2411.30 and Rs 154.95 respectively during 2020. Healthcare related shares like Thyrocare, Lalpath Lab, Metropolis, Shalby, etc also registered smart gain during 2020. However, out of 72 BSE HC scrips, the share price of 5 scrips i.e. Laurus Labs PEL, Kiltch, TAKE and Fermenta declined during 2020. Fermenta shares declined sharply by over 55 per cent and TAKE share went down by 46.5 per cent.
Among the top pharma companies like Dr Reddy’s Laboratories, Cipla, Cadila, Ipca, Ajanta Pharma, Torrent Pharma, Jubilant, Biocon, Indoco, Unichem and Natco moved up by over 50 per cent during 2020. Sun Pharma and Lupin improved by 37 per cent and 27.7 per cent respectively to Rs. 592.35 and Rs. 976.70. Ipca Laboratories scrip registered growth of over 93 per cent to Rs. 2,191.05 as at the end of 2020 from Rs. 1,134.90 as at the end of 2019.
Despite continued adverse impact of the Covid-19 pandemic in at least the first half of Q2, the financial performance remained positive during the first half. Leading 10 pharmaceutical Indian giants i.e. Sun Pharmaceuticals, Aurobindo Pharma, Dr Reddy’s Laboratories, Cipla, Lupin, Cadila Healthcare, Glenmark Pharma, Alkem Labs, Torrent Pharma and Jubilant Life have successfully strengthened working.
The aggregate revenues of these 10 companies improved by 6.1 per cent to Rs. 63,166 crore in the first half ended September 2020 from Rs. 59,541 crore in the corresponding half of last year. The sales for the full year ended March 2020 were at Rs. 1,21,342 crore. Aurobindo Pharma, Cipla and Cadila Healthcare registered double digit growth in sales, while Sun Pharma, Lupin, Jubilant Life and Torrent Pharma clocked lower sales.
The net profit of these 10 leading companies increased by 20.9 per cent to Rs. 7,702 crore in first half from Rs. 6,373 crore despite lower profit by Sun Pharma, Dr Reddy’s Labs and Jubilant Life Sciences. Aurobindo Pharma, Lupin, Cadila Healthcare, Cipla, Glenmark Pharma, Alkem Labs and Torrent Pharma registered higher growth in profits. The net profit of full year 2019-20 stood at Rs. 11,063 crore.
The sales of Sun Pharma declined by 1.7 per cent during first half ended September 2020 to Rs. 15,925 crore from Rs. 16,208 crore in the same period of last year due to lower sales in US, emerging market and ROW. The company reported net loss of Rs. 481 crore as against net profit of Rs. 2,669 crore basically due to exceptional provisions in respect of Taro Pharma USA. The second highest Indian Pharma company, Aurobindo Pharma achieved strong all-round performance in the first half and declared second interim dividend of 125 per cent. It’s international sales worked out to 95 per cent during first half ended September 2020.
To overcome challenges and impact of Covid situation, Indian companies continued relentlessly investing in research and development. Sun Pharma’s R&D expenditure increased to Rs. 1,033 crore in the first half from Rs. 910 crore in the similar period of last year. DRL’s R&D spending reached at Rs. 834 crore and worked out to 9 per cent of sales. Lupin’s second quarter ended September 2020 increased to Rs. 384 crore from Rs. 358 crore.
Aurobindo’s R&D spending during second quarter amounted to Rs. 407 crore. As at the end of September 2020, on a cumulative basis, Aurobindo filed 629 ANDAs with US FDA and received approval for 449 ANDAs including 28 tentative approvals. It has launched 17 products during the quarter including 6 injectables. Jubilant Life R&D moved up to Rs. 107 crore and that of Alkem Labs’ reached at Rs. 258 crore from Rs. 227 crore. Few Indian companies set to launch Covid vaccine in near future and set to boost working in near future.
With the strong demand recovery and new business sign-ups, R&D, investments, easy liquidity position and strong international market conditions, Indian companies well set to overcome Covid challenges in the second half of 2020-21 and investors may get better returns from their investments in pharma segment.
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| Financial highlights for Half year ended September 2020 |
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| | Company (Rs crore) | Half year ended |
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| Full year ended |
| Sales | Net profit | Sales | Net profit |
| Sep-20 | Sep-19 | Sep-20 | Sep-19 | Mar-20 | Mar-20 |
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| | Sun Pharmaceuticals | 15925 | 16208 | -481 | 2669 | 32325 | 4187 | | Aurobindo Pharma | 12213 | 10875 | 1586 | 1275 | 22738 | 2830 | | Dr Reddy's Labs | 9314 | 8644 | 1315 | 1755 | 17460 | 1950 | | Cipla | 9249 | 8159 | 1225 | 921 | 16694 | 1500 | | Lupin | 7250 | 7636 | 318 | 176 | 15141 | -269 | | Cadila Healthcare | 7312 | 6650 | 922 | 419 | 13812 | 1204 | | Glenmark Pharma | 5217 | 5047 | 488 | 365 | 10397 | 776 | | Jubilant Life Sciences | 4172 | 4389 | 312 | 434 | 8976 | 898 | | Alkem Labs | 4366 | 4114 | 905 | 568 | 8344 | 1149 | | Torrent Pharma | 4073 | 4027 | 631 | 460 | 7780 | 1025 |
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| | Total | 63166 | 59541 | 7702 | 6373 | 121342 | 11063 |
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