Pharma sector outlook 2019 in India: Expect big recovery in New Year; IPCA, Divis Lab champions of 2018
The sector has been volatile throughout the year due to constant news flow in the markets. Some giants of the sector witnessed objections over their manufacturing plants and medicine pricing in the U.S. markets.
Pharma sector outlook 2019 in India: The year 2018 has been an assorted year for the pharma sector. The sector has been volatile throughout the year due to constant news flow in the markets. Some giants of the sector witnessed objections over their manufacturing plants and medicine pricing in the U.S. markets. Major acquisition decisions by some players were also the part of talks in pharma sector this year.
Derivative & Technical Analyst, Chandan Taparia, Motilal Oswal told Zee Business online that the sector has already bottomed out, after a persistent weakness of 4 months. "Therefore, 7 to 8 per cent growth in pharma, to be expected in 2019, bullish for the upcoming year," Taparia said.
NSE Nifty Pharma is trading today at Rs 8,879.75, up by 65.55 points or 0.74 per cent, while Nifty 50 is hovering close to Rs 10,900.
India's Pharma sector features some big players like Dr.Reddy's Laboratories, Divi's Lab, Sun Pharma, Cipla, Aurobindo Pharma, Glenmark, Lupin, Cadila Health, Glaxo SmithKline, Biocon, Pfizer, Novartis, Morepen Lab etc.
Pharma sector outlook for 2019:
1. The USFDA approvals are continued for many companies, on their medicines, which is a positive outlook, that is to be taken to the year 2019.
2. Improvement in domestic formulation business of pharma companies expected in 2019.
3. A reduction in R&D expenses for pharma companies expected in 2019.
4. Valuations of pharma players are still expensive. It may continue in 2019.
5. Patents worth $10,500 to expire in the period between 2018-2022.
6. The government will likely focus more on healthcare due to upcoming elections. More healthcare schemes are expected in 2019.
Technical Analyst, Simi Bhaumik told Zee Business online, "I am bullish on pharma sector in 2019, expecting major recovery as it has been on a defensive note in the year 2018.''
Pharma sector champions in 2018:
1. Divis Lab: Divis Lab has given 33.5 per cent returns during the year 2018. Bhaumik is bullish on Divi's Lab as it will likely continue to maintain its chart in 2019.
2. IPCA Lab: IPCA Lab was the second best with a robust 32.02 per cent returns.
3. Torrent Pharma: Torrent Pharma fetched shareholders over 27 per cent returns.
4. GSK Pharma: GSK Pharma gave over 22 per cent returns during the year 2018.
5. Glenmark: Glenmark let the shareholders enjoy 17 per cent returns.
"Lupin and Pfizer are the stocks to be watchful in 2019, as I am expecting a positive year for both. said Bhaumik.
Pharma sector Zeroes in 2018:
1. Strides: Strides was the worst performer as it gave negative returns of 43 per cent.
2. Wockhardt: Wockhardt was the second-worst performer with negative 42 per cent returns.
3. Sun Pharma: Sun Pharma lost 23 per cent in the year 2018. Simi Bhaumik believes Sun Pharma is a stock to be kept in a portfolio for 2 to 3 years as it will likely to recover in 2019.
4. Piramal Enterprises: Piramal Enterprises moved down by 20 per cent in the year.
5. Cadila: Cadila dipped 15 per cent in 2018. Bhaumik said Cadila is in a consolidation mode and will recover from this position in the New Year.
"Aurobindo Pharma and Cipla will be watchful as well, as the stock has been in a consolidation mode, technically sounds positive for 2019," Bhaumik said.
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Pharma sector triggers for 2019:
1. Sun Pharma: Analysts tracking the company said they still haven’t got full clarity on Rs 2,242 crore loans advanced to employees and others.
2. Lupin: The company said it aims to address the USFDA warning letter on its Goa and Indore plants by end of FY19.
3. Fortis, Daiichi conflicts: Daiichi has alleged that the Singhs and their holding company are in violation of their undertakings to the court that they had sufficient unencumbered assets to satisfy the award.
4. Dr. Reddy, Suboxone case: U.S. appeals court has put a hold on the drugmaker from launching a copycat version of its rival Indivior Plc’s opioid treatment Suboxone Film.
5. Auro Pharma: Company's acquisition of dermatology and oral solid business from Sandoz Inc, a subsidiary of Swiss drug maker Novartis.
6. Zydus: The company acquired Heinz India consumer wellness business, that includes popular brands like Complan and Glucon D.
7 Biocon: The company got the European Commission's approval and marketing authorisation to its biosimilar Ogivri.