Indian pharma companies were under pressure in the last one year due regulatory issues. Constant warning letters from United States Food & Drug Administration (USFDA) in the form of 483 observations and import alert were keeping companies with higher US exposure under pressure.
While some of these issues were addressed by the firms, they expect it to be sorted out in the near to medium term time frame.
As a result, in the past 9-12 months, pharmaceutical stocks have plummeted by 20-35 percent.
Is there any change visible in sight? Will these companies continue to bleed?
The USFDA’s new drug commissioner is now outlining a policy to target faster generic approvals for drugs with limited competition and providing a list of off-patent and off-exclusivity drugs that have no generics approved, according to Citi said in its report.
The global financial services firm, however, expects that by accelerating commercialization of pipelines, it would also put pressure on incumbents that have a high concentration of limited competition products in its base.
"With accelerating approval timelines, it will be helpful to the generic players with large pipelines and ability to target more complex products by improving ability and lead time to monetize its development efforts,” Citi said in its report.
Top picks of Citi in the pharmaceutical space includes Aurobindo Pharma, Cipla and Biocon. However, the risk to base business is highest for Sun Pharma and Glenmark and lowest for Aurobindo Pharma.
In today’s trade, Sun Pharmaceutical Industries was down 0.94 percent at Rs 540.05, Glenmark Pharma was up 0.48 percent at Rs 631.95, Biocon was up 0.67 percent at Rs 330.05 and Aurobindo Pharma was up 1.10 percent at Rs 678.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
