Shares of pharmaceutical companies were under pressure during the morning trade on Wednesday with Nifty Pharma index hitting a 5-year low of 7,550, down nearly 4 per cent on the NSE. The pharma index fell below its previous low of 7,602 touched on June 6, 2014.
Among individual stocks, Glenmark Pharmaceuticals plunged 9 per cent intra-day to Rs 380 apiece, hitting an over 7-year low after its June quarter result missed analysts' expectations. The stock was quoting at its lowest level since August 2, 2012.
The pharma company reported a consolidated net profit at Rs 109 crore in Q1FY20 as against an average analyst estimate of Rs 159 crore. It had posted a profit of Rs 232 crore in the year-ago quarter. The company, however, said that figures were not comparable as the last financial year included one-time foreign exchange (forex) gain of Rs 138 crore. It's consolidated revenue grew by 7 per cent to Rs 2,323 crore, up from Rs 2,166 crore logged in the corresponding quarter of previous fiscal.
"The first quarter performance in key markets like India and Europe was impressive on account of new product launch and partnership deals. However, the overall performance was impacted due to moderate performance in the US and subdued performance in LATAM," the management said in a statement.
Similarly, Dr Reddy’s Laboratories slipped 8 per cent to trade at Rs 2,351 per share in the early morning deal amid uncertainty over the launch of NuvaRing before mid calendar year 2020. The drug firm has received a Complete Response Letter (CRL) from the US Food and Drug Administration (US FDA) for its generic version of contraceptive NuvaRing.
“The key negative was the management commentary on Nuvaring launch. With the management awaiting feedback from the FDA on the upcoming goal date and now expecting further queries from the FDA, Nuvaring launch is now a potential H2FY20 event. The management had earlier indicated that the launch will be pushed out to H2FY20 in the absence of an approval before August 2019,” analysts at JM Financial said in a company update.
Sun Pharmaceutical Industries also slipped 7 per cent to Rs 408, erasing its previous day’s 4 per cent gain despite a strong revenue growth coupled with margin expansion in Q1FY20.
Analysts at BOB Capital Markets believe the US base business of Sun Pharma declined sequentially despite five launches in Q1.
“While our fundamental thesis of positive operating leverage in the US business and steady India/EM business dynamics remains intact and is expected to drive sustained earnings momentum for Sun Pharma (+23 per cent CAGR over FY19-FY21E), we believe the recent corporate governance issues limit scope for a valuation rerating in the medium term,” the brokerage firm said in a result review.
Among other stocks, Lupin, Cadila Healthcare, Aurobindo Pharma and Divis Lab were down in the range of 2 per cent to 4 per cent on the NSE.
At 11:15 am, Nifty Pharma index, the sole loser among sectoral indices, was down 2.6 per cent at 7,646, as compared to a per cent rise in the benchmark Nifty50 index.