Shares of pharmaceutical companies are in limelight in otherwise subdued market in morning trades after a global rating agency Fitch said its outlook on India's pharmaceutical sector for 2012 remains stable, as earnings prospects are expected to remain positive because of the growing global demand for generics and opportunities provided by patent expiries in developed markets.
Wockhardt, Orchid Chemcials, Biocon, Aurobindo Pharma, Ranbaxy Laboratories, Cipla, Sun Pharma and Dr Reddy’s Laboratories are trading higher by 2-5% on the Bombay Stock Exchange (BSE).
The BSE healthcare index of pharma companies has rallied 71 points or 1.1% compared with a marginal 10 points fall in the benchmark index Sensex at 1043 hours.
In a new report, Fitch points to forecasts from IMS Health which expects that the shift in global drug spending towards generics will rise to 39% of total pharmaceutical expenditures in 2015, compared to 20% in 2005 and 27% in 2010.
This growing demand, a subsequent increase in capacity utilisation and better cost rationalisation will ensure stability for Indian pharmaceutical companies' operating margins, and they could also benefit from additional licensing income from strategic alliances and the depreciating rupee, says the ratings agency.