Analysts give hot pharma picks for 2006

Pharma analysts tell Moneycontrol that cut in excise duty, a liberal new drug policy in April, drugs worth USD 25 billion coming off patent in 2006 and a USD 27 billion CRAMS market by 2010 will augur well for both domestic and MNC pharma companies.

Analysts think that these companies in the pharma sector can give returns of anywhere between 15-30% this year on a conservative estimate.

Ranbaxy, which was recently hammered on the bourses, could be a good value pick at around Rs 300 with a possible one-year price target of Rs 400, says Avdesh Garg of Pranav securities. While pharma MNCs like Aventis, Merck, Pfizer, GSK Pharma, and Wyeth Laboratories will reap benefits of strong product pipeline, domestic pharma stocks like Ranbaxy, Dr Reddy’s, Glenmark Pharma, Sun Pharma and Biocon will benefit from budgetary sops on their R&D efforts.

The major story for 2006, however, is likely to emerge in the nascent contract research and manufacturing services – popularly known as CRAMS. Dishman Pharmaceuticals, Nicholas Piramal, Shasun Chemicals and Jubilant Organosys are some of the heavyweights well equipped to take advantage of a booming CRAMS industry.

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