Pharma shares gain; Natco, Glenmark, Syngene, Sequent Scientific up over 5%

Patient footfalls are gaining traction in healthcare units as demand from non-Covid-19 patients is gathering pace, according to a November 25 report by CARE Ratings.

Shares of pharmaceutical companies extended their past week rally on Monday, with the S&P BSE Healthcare index hitting a fresh record high, gaining nearly 2 per cent on the expectation of improved demand from non-Covid-19 patients.

At 11:04 am, the S&P BSE Healthcare index, the top gainer among sectoral indices, was up 1.6 per cent at 21,317 points, as compared to a 0.27 per cent rise in the S&P BSE Sensex.

The healthcare index hit a fresh record high of 21,320 points in intra-day trade today, thus rallying 5 per cent in the first five trading days of December 2020. In comparison, the benchmark index was up 2 per cent during the period.

Glenmark Pharmaceuticals, Syngene International, Sequent Scientific, Natco Pharma, Caplin Point Laboratories, Dishman Carbogen Amcis, FDC, and Aarti Drugs were up in the range of 5 per cent to 7 per cent on the BSE. Sun Pharmaceutical Industries, Ajanta Pharma, Lupin, and Dr Reddy’s Laboratories were up between 2 per cent and 3 per cent.

With the unlocking of the economy and the announcement of various unlock guidelines, patient footfalls are gaining traction in healthcare units as demand from non-Covid-19 patients is gathering pace, according to CARE Ratings.

Also, hospitals and patients are adapting themselves to the Covid-19 environment and social distancing norms. Thus the operations of the healthcare industry are estimated to return to normal levels only from Q3FY21 onwards which is expected to augur well for the Indian pharma industry as it will result in the higher prescription of medicines from hospitals, clinics, OPD centres, local clinics, and doctors, the rating agency said in drugs and pharma update in H1FY21 report dated November 25, 2020.

However, CARE Ratings said it might not see operations at pre-Covid level rates in the current quarter for all the areas of ailments primarily non-high priority treatments (dermatology, orthopaedic, etc.) which, in turn, will restrict prescription of these drugs. It is to be noted that the e-consultations and other home care services will provide support to the pharma industry.

In addition to this, the industry will continue to see demand from the domestic as well as international markets for some of the antivirals, antimalarials, and antibiotics given the spread of Covid-19. Moreover, the demand for Indian drugs in the international market will be supported by new product launches thereby aiding the Indian pharma exports. Thus, the demand for drugs is expected to remain steady to a large extent.

However, the industry is likely to face delays in product launches and clinical trials given the current scenario. Besides, Covid-19 has also led to deferment of physical inspections by the USFDA which has delayed in the commencement of the pharma units and also the launch of products, it said.