Pharma Mnc Shares Seen Changing Little This Year

Shares of multinational (MNC) pharmaceutical firms are likely to remain stagnant this year on account of limited interest in them, analysts said. Investors, they said, are preferring to focus on the domestic pharma firms instead.

MNC pharma stocks took a beating last year with most of them nosediving by 30-40 per cent, and in some cases, more than 50 per cent, between January 2001 and December.

They fell, analysts said, due to fewer innovations on the one hand, and faulty and not-so-competitive pricing strategy on the other, unlike their local counterparts.

"There is likely to be no major movement in the MNC pharma stocks. While the surging Indian companies are focusing on exports as well, the multinationals are concentrating only on the domestic markets. Add to that, new product launches are also fewer due to the current patent regime," said V V L N Sastry, country head of Firstcallindia Equity Advisors.

Interestingly, only Ranbaxy Laboratories and Morepen could find a place among the top 50 traded scrips last year. But Ranbaxy, Cipla, Dr Reddy's, Sun Pharma and Glaxo were among the top 50 scrips, market capitalisation-wise. The pharma MNCs are conspicuous by their absence in these lists.

With India recognising process patents, the domestic companies introduce generic versions of patented molecules introduced by multinationals. And due to various price disadvantages the multinationals finds themselves at the receiving end.

"The trend of slow movement in the MNC pharma stocks is likely to continue this year too and the stocks could see some movement when the new Drug Price Control Order (DPCO) is announced," said Prashant Nair, group manager - research, Pranav Securities.

Among pharma MNCs, the Rhone-Poulenc scrip plummeted by over 54 per cent to Rs 351.60 on December 31, 2001 against Rs 774.55 in the beginning of 2001.

Novartis plunged by nearly 50 per cent to Rs 209.85 from Rs 414.65. German Remedies saw its scrip losing value by over 40 per cent last year.

E Merck (India), Parke Davis (India), Glaxo, Abbott Labs and Knoll Pharmaceuticals - all these scrips have taken a beating of over 30 per cent.

Some top performers such as Glaxo, Aventis and Pfizer are likely to keep gaining this year as well, says an analyst with a private broking house.

Analysts feel that this investor fascination for local companies is likely to continue for some more time.