Regulatory issues and fourth quarter earnings of some big Indian drug makers kept the week busy. The debate over generic drug names in prescriptions, stents, new drug additions to drug price control, data on Indian pharmaceutical market and US Senate clearing Scott Gottlieb name as US FDA chief also grabbed headlines.
How did pharma index perform?
The BSE Healthcare index after two consecutive weeks of slide recovered this week and even bettered the benchmark Sensex, gaining 1.11 percent, compared to a 0.91 percent rise of the main index.
Sun Pharma, Cadila, Aurobindo, Cipla and Piramal were the gainers. Lupin, Dr.Reddy’s, Glenmark and Divis were the losers. Glenmark is the worst performing stock losing almost 10 percent of its market value, while Piramal is the top gainer rising around 3.5 percent.
Domestic pharma in high single digit growth
Indian pharmaceutical market grew at 8.3 percent in April compared to 5.5 percent growth in the same period last year, according to data from market research firm AIOCD-AWACS. The growth comes on the back of steady normalization of supply chain disruption caused by demonetization and seasonal factors.
Regulatory developments
Scott Gottlieb was sworn in as US FDA commissioner this week. A doctor, FDA veteran, cancer survivor, biopharma investor and consultant, Gottlieb cleared the Senate test despite strong opposition from Democrats over his close business ties with the industry. Gottlieb will now set speed and safety limits for the agency and drug developers.
The United States Food and Drug Administration (US FDA) observations kept the industry busy.
Lupin said it received 8 observations for its Aurangabad plant. The company said the observations are procedural in nature and the company is responding to it.
Biocon too had its share of observations for its Bengaluru facility, Torrent was also in news towards the end of the week for four observations for Indrad facility in Gujarat.
Marksans Pharma and Indoco Remedies have announced that they have successfully cleared UK drug regulator MHRA inspections for their plants in Goa bringing cheer to their investors. UK contributes about one-third of the generic formulation sales.
Stents, generics, drug price control and NPPA
A two weeks after Indian drug regulator the National Pharmaceutical Pricing Authority (NPPA) rejected applications of Abbott and Medtronics to withdraw their stent products in India on commercially unviable reasons, another major coronary stent maker was in news as its application seeking an upward revision of stent pricing cap was rejected by Indian government.
The medical device makers especially the multinational companies, who enjoy two-thirds of market for coronary stents used in angioplasties, are said to have been impacted by NPPA's decision to include stent maker under price control.
In further extension of its aggressive price control – NPPA included 19 medical devices to monitor their price movement and asked the manufacturers not increase the drug by more than 10 percent.
Q4 Results
Dr.Reddy’s Q4 results were lackluster, lack of significant new approvals, increasing competition and channel consolidation have started to impact, company’s critical North American generics business. However approval of API product from Miryalaguda facility which is under warning letter and revival of Russian generics business are some green shoots for the company.
Glenmark failed to live up to the expectations of investors in Q4 who were anticipating record breaking quarter on the back of 180-day marketing exclusivity for generic Zetia.
Things to look out for this week
Aurobindo Pharma, Glaxosmithkline, Dishman, Laurus Labs, will announce Q4 results this week.
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