Nifty Pharma index slips 5%, records sharpest intra-day fall in 7 months

Alembic Pharma and Dr Reddy's Labs plunged 12% and 11%, respectively in intra-day trade post their June quarter results

Shares of pharmaceutical companies were under pressure, with the Nifty Pharma index falling 5 per cent on the National Stock Exchange (NSE) in intra-day trade on Tuesday after Dr Reddy’s Laboratories and Alembic Pharmaceuticals reported a disappointing set of numbers for the quarter ended June 2021 (Q1FY22).

At 02:27 pm, Nifty Pharma, the top loser among sectoral indices, was down 5.1 per cent as compared to a 0.69 per cent decline in the Nifty50 index. The pharma index slipped as much as 5.25 per cent to record its sharpest intra-day fall during the current calendar year 2021. Earlier, on December 21, 2020, the Nifty Pharma index had tanked 6.4 per cent in intra-day trade.

Alembic Pharma (Rs 805.50) and Dr Reddy’s Laboratories (Rs 4,790) have plunged 12 per cent and 11 per cent, respectively in intra-day deals. Sun Pharma Advanced Research (SPARC), Lupin, Glenmark Pharmaceuticals, Lincoln Pharmaceuticals, Wockhardt and Panacea Biotech were down between 5 per cent and 8 per cent. Aurobindo Pharma, Cipla and Divis Laboratories were down 4 per cent each.

Alembic Pharma reported a disappointing set of numbers in Q1FY22, with consolidated profit after tax (PAT) declining 45.4 per cent year-on-year (YoY) to Rs 164.50 crore on the weak performance of the US business. The pharmaceutical company had posted a PAT of Rs 301 crore in Q1FY21. Ebitda (earnings before interest, taxes, depreciation, and amortization) margins declined 1,258 basis points (bps) YoY to 17.8 per cent due to higher other expenditure.

The company’s revenues declined 1.1 per cent YoY to Rs 1,326 crore with strong growth in domestic formulations being offset by a 38.1 per cent YoY decline in US sales to Rs 369 crore. Domestic formulations grew 57.2 per cent YoY to Rs 481 crore. The acute and specialty segments grew faster than the represented pharmaceutical market, the company said.

"India business grew exceptionally well and outpaced the industry and we hope to see this momentum continuing due to the initiatives undertaken recently," the management said. The US business faced price erosion due to increased competition, however, the long term view of the US market remains intact, it added.

"The topline performance was below expectation, impacted by a decline in US sales. Profitability was also lower than expected due to higher than expected raw material, employee and other expenditure (ex-R&D). Owing to pricing pressure across the Sartan portfolio, increasing competition and delay in inspection, the management expects US quarterly sales to remain subdued in the near term, which may impact near term margins," ICICI Securities said in a note.

Dr Reddy’s Labs, meanwhile, reported a 1 per cent YoY decline in its consolidated net profit at Rs 570.8 crore in Q1FY22. The drugmaker had posted a profit of Rs 579.3 crore in the year-ago quarter. Ebitda margins were down 560 bps YoY and 310 bps sequentially at 20.7 per cent during the quarter. Gross profit margin decreased by 380 bps over the previous year and 150 bps sequentially, majorly on account of price erosion and increase in inventory provisions related to few products.

The company’s revenue grew 11 per cent YoY at Rs 4,919 crore as against Rs 4,418 crore in the corresponding quarter of the previous fiscal. India revenue grew 69 per cent YoY, higher than Street's estimates, aided by better traction in the chronic segment and the addition of the Wockhardt portfolio. However, North American sales were up in single-digit or 1 per cent at Rs 1,739 crore. Analysts had expected double-digit growth from the US sales. The sequential decline of 1 per cent was on account of price erosion in some of the products partially offset by volume traction and new products launched, the company said.

COMPANY	LATEST	PREV CLOSE	LOSS(%)
Alembic Pharma	813.05	910.75	-10.73
Dr Reddy's Labs	4876.90	5409.15	-9.84
SPARC	242.75	261.00	-6.99
Glenmark Pharma.	591.00	626.50	-5.67
Lupin	1107.05	1171.65	-5.51
Lincoln Pharma.	351.00	369.75	-5.07
Wockhardt	523.80	549.85	-4.74
Panacea Biotec	320.90	336.10	-4.52
Aurobindo Pharma	910.15	952.95	-4.49
Alembic	123.50	129.15	-4.37
Cipla	913.75	950.65	-3.88
Shilpa Medicare	622.95	647.95	-3.86
Neuland Labs.	2000.00	2080.15	-3.85
Caplin Point Lab	911.95	945.65	-3.56
Laurus Labs	628.45	651.30	-3.51
Gland Pharma	3880.60	4017.85	-3.42
Marksans Pharma	82.95	85.85	-3.38
Granules India	365.15	377.30	-3.22
Sun Pharma.Inds.	681.70	703.55	-3.11
Glaxosmi. Pharma	1673.30	1726.20	-3.06