Nifty Pharma gains 2.5%, crosses 10K mark for the 1st time since Oct 2018

Aurobindo Pharma, Biocon, Cipla, and JB Chemicals & Pharmaceuticals hit their respective 52-week highs on the NSE on Tuesday.

Shares of pharmaceutical companies continued their northward journey on Tuesday with Nifty Pharma index crossing 10,000 mark after a gap of 19 months as Aurobindo Pharma, Biocon, Cipla and JB Chemicals & Pharmaceuticals hit their respective 52-week highs on the National Stock Exchange (NSE).

Glenmark Pharmaceuticals, Cadila Healthcare, Sun Pharmaceutical Industries, Aurobindo Pharma and Lupin were up in the range of 2 per cent to 5 per cent today.

The Nifty Pharma index rallied 2.5 per cent during the day to hit a high of 10,047 points, its highest level since October 3, 2018. At 10:45 am, the pharma index was up 1.7 per cent, as compared to a 0.58 per cent rise in the Nifty 50 index. In the past two months, the Nifty Pharma index has zoomed 42 per cent, against a 20 per cent rise in the benchmark index.

Shares of Aurobindo Pharma hit a 52-week high of Rs 758, up 4.4 per cent ahead of January-March quarter (Q4FY20) earnings on May 3, 2020. The company ranks second in the US generic injectables market in terms of units (eaches) share as of December 2019. It has a comprehensive injectables portfolio (122 filed and 49 pending ANDAs) and is best placed to capitalise on the growth opportunities led by drug shortages and increased demand.

Additionally, resolution of Unit IV (largest injectables facility) gives confidence on growth as it paves way for future approvals. The pending ANDAs and future filings comprise a bigger share of complex opportunities viz. oncology, hormonal, liposomes, microspheres, depot injectables, peptides which will improve product mix and profitability, analysts at HDFC Securities said in a company update.

Biocon hit a new high of Rs 396, up 3 per cent, gaining 12 per cent in the past two trading days after its partner Mylan received a favourable ruling from US Patent and Trademark Appeal Board (PTAB) on Sanofi’s four device patents for Lantus SoloSTAR.

“The favourable ruling strengthens our resolve to provide high-quality, affordable Insulin Glargine to diabetic patients in the US and generate savings for their healthcare system. Our partner’s New Drug Application (NDA) for Semglee is under active review by the US FDA and this favourable ruling further clears the path for the anticipated launch of our Glargine in the U.S. in mid-CY20,” said Dr. Christiane Hamacher, CEO and Managing Director, Biocon Biologics.

Lupin was up 2.6 per cent at Rs 872 today, after 6 per cent decline in the past four trading days. After three years of earnings decline, analysts at Motilal Oswal Securities expect Lupin’s earnings growth to improve over FY20-22E, based on robust ANDA pipeline (including limited competition products like g-Albuterol/g-Fostair) and sustained outperformance in the domestic formulation (DF) market.

While valuations are rich, analysts at Emkay Global Financial Services believe that the stock of Lupin has near-term catalysts – gAlbuterol launch/levothyroxine ramp-up and possible plant clearances (Goa/Somerset/Pithampur can boost EPS by 8-10 per cent).