Pharma Stocks Outlook for the week: 24-28.12.2012


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Stocks of major pharmaceutical companies are seen moving in a narrow range in the coming week as the market awaits the Supreme Court verdict on the National Pharmaceuticals Pricing Policy 2012, expected on Jan 15. Positive movement in the pharmaceutical sector in the coming week is highly unlikely. The any major proposal for foreign direct investment in the sector, if announced, could be the trigger market is looking for. However, such a deal takes at least three months to get regulatory approvals, hence any uptrend is unlikely in the sector anytime soon.

Under the National Pharmaceuticals Pricing Policy 2012, laid in Parliament on Dec 7, the ceiling of prices of essential drug formulations would be based on the simple average price of brands with over 1% market share. Earlier, the cap on essential drugs formulation and bulk drugs was cost-based. The policy, after being "tweaked" by the government, would not be as detrimental to the sector as was anticipated.

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