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Pharma scrips close 2014 on promising note, BSEHC moves up by over 47% in 2014
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Sanjay Pingle, Mumbai
December 30 , 2014
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The Indian pharmaceutical companies have closed the year 2014 on
promising note and registered significant growth in market
capitalization. With better financial performance despite competition,
new drug price control order, quality problems and lower approvals from
highly regulated markets, the pharma scrips enjoyed strong investors
confidence as well as support from financial institutions during 2014.
Investors clocked up higher returns in the form of equity dividend and
share price movements. Several pharma companies restructured there
business and divested there part of operations. Further, the Sun Pharma -
Ranbaxy deal changed the dynamics of the market.
The BSE
Healthcare (BSEHC) index of 17 pharma companies moved up by 47.4 per
cent to 14692.95 points as at the close of year 2014 from 9966.26 points
on December 31, 2013. The BSE Sensex of 30 major companies, from
various sectors of Indian economy, moved up only by 29.9 per cent to
27499.42 points from 21170.68 points on December 31, 2013. Thus, the
Healthcare index outperformed BSE Sensex during 2014. The new central
government assisted well to improve investors sentiment.
The
BSEHC index touched to its yearly peak level at 15238.58 on December 4,
2014 as against its yearly lowest level of 9886.24 on January 3, 2014.
The BSEHC moved up smartly and crossed 11,000 mark on June 18 2014 and
12,000 mark on July 7, 2014. The index achieve another milestone of
15,000 mark on November 10 and reached at its yearly peak level at
15238.58 on December 4. The BSE Sensex index reached at yearly highest
level at 28822.37 on November 28, 2014 and lowest at 19,963.12 on
February 4, 2014.
The major scrips from BSEHC like Aurobindo Pharma, Torrent Pharma and Wockhardt improved by over 125 per cent during 2014 to Rs. 1136.40, Rs. 1131.30 and Rs. 1009.75 respectively. Similarly, Cadila Healthcare, Cipla, Lupin, went up by over 50 per cent during 2014 to Rs. 1598.35, Rs. 625.80 and Rs. 1427.55.
With
stringent approval norms by US FDA, the Indian pharma companies secured
102 ANDAs approvals upto December 19, 2014 as against 154 ANDAs in the
previous year. Similarly, tentative approvals were at 33 as against 38
in the 2013. The US FDA approved total 336 ANDAs upto December 19, 2014
as against 400 in the 2013 and 476 in the year 2012.
The
pharmaceutical companies are focusing on research and development
(R&D) and increasing there investment in R&D to enter new
geographies. The Indian companies are building up strong product
pipeline. The R&D expenditure of 25 leading Indian pharma companies
increased by 20.6 per cent to Rs. 6,103 crore during 2013-14 from Rs. 5,060 crore in the 2012-13 and Rs.
4,178 in 2011-12. R&D expenditure as percentage of standalone net
sales worked out to over 7 per cent for last three years. Though this
investment is small as compared to investment made by major
international players, these companies set to capture upcoming
opportunities with expiration of patents. Several companies are set to
launch new generics in highly regulated markets with exclusivity period
in the coming years.
The US FDA has taken stringent action
against leading Indian companies like Ranbaxy, Wockhardt and others
during 2014 and stopped exporting drugs from these companies on account
of quality problems and compliance related issues. The frequent audits
by US FDA on the Indian plants of both multinationals and Indian
companies have led to an increased number of issuance of warning
letters.
Based on the financial performance during first half
year ended September 2014, the Indian pharmaceutical companies are set
to achieve net sales growth of 15 per cent in 2014-15 and similar growth
in profits. Thus the returns on investment will remain positive and
investors may get handsome returns.
companies, from various
sectors of Indian economy, moved up only by 29.9 per cent to 27499.42
points from 21170.68 points on December 31, 2013. Thus, the Healthcare
index outperformed BSE Sensex during 2014. The new central government
assisted well to improve investors sentiment.
The BSEHC index
touched to its yearly peak level at 15238.58 on December 4, 2014 as
against its yearly lowest level of 9886.24 on January 3, 2014. The BSEHC
moved up smartly and crossed 11,000 mark on June 18 2014 and 12,000
mark on July 7, 2014. The index achieve another milestone of 15,000 mark
on November 10 and reached at its yearly peak level at 15238.58 on
December 4. The BSE Sensex index reached at yearly highest level at
28822.37 on November 28, 2014 and lowest at 19,963.12 on February 4,
2014.
The major scrips from BSEHC like Aurobindo Pharma, Torrent Pharma and Wockhardt improved by over 125 per cent during 2014 to Rs. 1136.40, Rs. 1131.30 and Rs. 1009.75 respectively. Similarly, Cadila Healthcare, Cipla, Lupin, went up by over 50 per cent during 2014 to Rs. 1598.35, Rs. 625.80 and Rs. 1427.55.
With
stringent approval norms by US FDA, the Indian pharma companies secured
102 ANDAs approvals upto December 19, 2014 as against 154 ANDAs in the
previous year. Similarly, tentative approvals were at 33 as against 38
in the 2013. The US FDA approved total 336 ANDAs upto December 19, 2014
as against 400 in the 2013 and 476 in the year 2012.
The
pharmaceutical companies are focusing on research and development
(R&D) and increasing there investment in R&D to enter new
geographies. The Indian companies are building up strong product
pipeline. The R&D expenditure of 25 leading Indian pharma companies
increased by 20.6 per cent to Rs. 6,103 crore during 2013-14 from Rs. 5,060 crore in the 2012-13 and Rs.
4,178 in 2011-12. R&D expenditure as percentage of standalone net
sales worked out to over 7 per cent for last three years. Though this
investment is small as compared to investment made by major
international players, these companies set to capture upcoming
opportunities with expiration of patents. Several companies are set to
launch new generics in highly regulated markets with exclusivity period
in the coming years.
The US FDA has taken stringent action
against leading Indian companies like Ranbaxy, Wockhardt and others
during 2014 and stopped exporting drugs from these companies on account
of quality problems and compliance related issues. The frequent audits
by US FDA on the Indian plants of both multinationals and Indian
companies have led to an increased number of issuance of warning
letters.
Based on the financial performance during first half
year ended September 2014, the Indian pharmaceutical companies are set
to achieve net sales growth of 15 per cent in 2014-15 and similar growth
in profits. Thus the returns on investment will remain positive and
investors may get handsome returns.
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