Nifty Pharma outshines benchmarks, up 2%; Cipla, Sun Pharma hit 52-wk highs

Shares of Glenmark Pharma, Granules India, Divi's Laboratories, Torrent Pharma, Lupin and Aurobindo Pharma, surged in the range of 2 per cent to 6 per cent in Monday's intra-day trade

Shares of pharmaceutical companies were in focus as frontline stocks rallied up to 6 per cent in Monday's intra-day trade, due to strong business outlook. At 12:12 PM, the Nifty Pharma, and the S&P BSE Healthcare indices were up  2 per cent each, as compared to 0.4 per cent decline in the Nifty50, and the S&P BSE Sensex.

Among individual stocks, shares of Lupin, and Aurobindo Pharma surged in the range of 5 per cent to 6 per cent. Glenmark Pharmaceuticals, Granules India, Divi’s Laboratories, Torrent Pharmaceuticals, on the other hand, were up in the range of 2 per cent to 4 per cent.

Shares of Cipla hit a new high of Rs 1,141.55, up 2 per cent on the NSE. In the past one month, the stock has soared 12 per cent, as compared to 3 per cent decline in the Nifty50. The street is betting on factors like strong launch pipeline in the US, market share gains from recent launches, and upward scale in the consumer business.

That apart, shares of RPG Life Sciences, too, hit a record high of Rs 828.85, up 3 per cent in Monday's intra-day trade. In the past one week, the stock has gained 15 per cent, as against no change in the S&P BSE Sensex.

The company is exclusively engaged in pharmaceutical business and operates across Domestic Formulations (DFs), International Formulations and Active Pharmaceutical Ingredients (API).

While the growth estimate for the overall industry is positive, RPG Lifesciences will continue to focus on building chronic therapies, expanding specialty portfolio, and life cycle management of current legacy products. The international formulations business, meanwhile, will focus on globalization of existing products, development of new products, scouting of new partners and entry into newer markets.

"The government's focus on developing APIs, and reducing dependence on imports, furthers the strategic importance of the business. This business could see increase with overseas companies looking at India as a global hub for supply of APIs," RPG Life Sciences said.

Besides, shares of Sun Pharma gained nearly 2 per cent to hit a 52-week high of Rs 967.50 in Monday's intra-day trade. The stock surged 8 per cent in one week, and has surpassed its previous high of Rs 966.90, which it had touched on April 29, 2022.

The company expects the global pharmaceutical market to reach about $1.8 trillion by 2026, growing at a compounded rate of approximately 3-6 per cent. Going ahead, the company expects high-single-digit to low-double-digit consolidated topline growth for FY23.

"The main growth drivers will be increased pharmaceutical spending in the pharmerging markets and the consistent launch of high-end specialty innovative products in developed markets," Israel Makov, Chairman of Sun Pharma said.

That said, analysts at Nirmal Bang Equities do not expect any material change for the pharma industry. While the Indian market is likely to grow by 10-11 per cent per annum, growth in the US market remains a challenge unless competition intensity abates, which is not visible in the near term.

"To improve Gx financial visibility, most companies are targeting low-competition complex Gx as well as specialty products. However, these products are adding more uncertainty due to delays in launches (like Copaxone and Nuvaring of Dr Reddys, Copaxone of Biocon, Abraxine of Cipla, Spiriva of Lupin, transdermals of Cadila etc.) amid regulatory concerns," the brokerage firm said in a recent note.