Regulatory issues bridle pharma returns, USFDA scrutiny a major hurdle

Impact of an escalation of the observations will hit their profit estimates over the next couple of years

Pharmaceutical companies, which have underperformed the broader indices, could face further headwinds, given the increased regulatory scrutiny from the US drug regulator. The BSE Healthcare Index is up 4.5 per cent since the start of the year, compared to Sensex returns of over 11 per cent.

Cadila Healthcare, Torrent Pharmaceuticals, and Aurobindo Pharma have received multiple observations (between 10-14 for Aurobindo and Cadila) for their key plants at Moraiya, Dahej, and Hyderabad.

Analysts say the large number of observations is alarming, given that some of these sites have already been inspected in the past and been cleared. “Indian pharma majors,