Pharma shares in demand; CNX Pharma index hits record high

Sun Pharma, Lupin, Glenmark Pharma, Cadila Healthcare, Cipla, Divi's Lab and Ranbaxy are up 1-3% on NSE.

Shares of pharmaceutical companies are in demand and trading higher by up to 10% on the bourses after reporting a good set of numbers for the quarter ended December 2014 and expectation of strong export growth backed by better regulatory compliance track record and patent expiry.

Sun Pharmaceutical Industries, Lupin, Glenmark Pharmaceuticals, Cadila Healthcare, Cipla, Divi’s Laboratories and Ranbaxy Laboratories from the frontline pharmaceutical stocks are up 1-3% on the National Stock Exchange (NSE).

At 1139 hours, CNX Pharma index was up 1.6% at 11,782 points compared to 0.43% rise in the benchmark CNX Nifty. The pharma index touched a record high of 11,861 in intra-day trade today.

S&P BSE Healthcare index, the largest gainer among sectoral indices, was up 1.6% at 15,869 points. It also hit an all-time high 15,957 during intra-day deal.

Marksans Pharma, Ajanta Pharma, Biocon, Dishman Pharmaceuticals, Wockhardt and TTK Healthcare have rallied between 4-10% on BSE.

India Ratings & Research (Ind-Ra) expects the pharmaceutical sector’s exports to reach Rs 1.1 trillion (Rs 110,000 crore) by FYE16 (FY14: Rs 91,000 crore), although the exports growth rate will moderate to 10%-12% yoy in FY16 from around 14% yoy in FY14 on fewer patents expiring.

“The pharmaceutical industry continues to benefit from lower cost of research and production which aids them in manufacturing for exports. Large pharmaceutical manufacturers will continue to look for in-organic growth opportunities in India and abroad while also expanding organically in FY16. Top-line growth and steady margins will support the capital expansion ensuring the maintenance of comfortable credit metrics,” analysts at Ind-Ra said in a report dated February 9, 2015.

Meanwhile, 9 out of 10 companies from CNX Pharma index have so far declared their December quarter results posted 14% year on year growth in aggregate net profit at Rs 2,821 crore against Rs 2,476 crore in the corresponding quarter of previous year.