Pharma Stocks Outlook for the week (14-18.01.2013)

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Stocks of major pharmaceutical companies are seen in a range next week ahead of Oct-Dec earnings. Dr Reddy's Laboratories, Glenmark Pharmaceuticals, Lupin Ltd, and Sun Pharmaceuticals are likely to post better-than-expected earnings for quarter ended Dec 31. However, expects Ipca Laboratories, Ranbaxy, and Pfizer Ltd's earnings to be below market estimates. The Supreme Court's verdict on the National Pharmaceuticals Pricing Policy is expected on Jan 14,

In case the apex court clears the government's new drug pricing policy, stocks of drug makers are unlikely to see much movement, as the possible impact on their bottomline has already been factored in. However, if the verdict is not on anticipated lines, there could be movement in some stocks. Under the new drug pricing policy, 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.

Pharma Stocks Outlook for the week (26-30.11.2012)

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 Stocks of major Indian pharmaceutical companies are seen facing an air of uncertainty in the coming week ahead of the Supreme Court's verdict on the National Pharmaceutical Policy that has been approved by the Union Cabinet.

We see non-government organisations pushing for a cost-based pricing policy, and in turn delaying the verdict of India's apex court. The court is slated to announce its verdict on the long pending pharma pricing policy on Tuesday. The Cabinet had Thursday approved the policy formulated by the empowered group of ministers.

The ministers' panel had recommended that the weighted average price of all drug brands with over 1% market share in a segment should be fixed as the
ceiling price of that particular drug. The move will bring prices of 348 essential drugs under government purview.

Indian pharmaceutical companies are not going to see a major impact due to the policy. Most domestic drug makers are estimated to incur a single-digit percentage fall in their bottomlines. The Cipla Ltd, Ranbaxy Laboratories Ltd, and Cadila Healthcare are the Indian companies that would face comparatively larger losses as against their other local peers.

If the pharma policy is accepted as it is by the court, Thavkar sees shares of almost all Indian pharmaceutical companies performing well in the
coming week. Pfizer is set to take the biggest hit, with a reduction of about 24% in its bottomline. Atorvastatin, the generic version of Pfizer Inc's cholesterol-lowering blockbuster drug Lipitor, was launched in the US market last December.

Pharma Stocks Outlook for the week (22-26.10.2012)

Action in the pharmaceutical counter is likely to be stock-specific next week, as companies will detail their quarterly earnings. Next week, companies such as Lupin Ltd, Ipca Laboratories Ltd, Torrent Pharmaceuticals will detail their Jul-Sep earnings. Lupin, which will declare its earnings Tuesday.

Robust growth in the US and Japan markets and weakness in the rupee against the US dollar is likely to have given the already fast-growing Lupin Ltd a booster shot in Jul-Sep. However, increase in effective tax rate and rise in cost of some raw materials, coupled with decline in other operating income, could weigh on Lupin's bottomline in Jul-Sep.

However, Ipca Laboratories, which will report its quarterly numbers Thursday, is likely to be muted next week. The company is seen reporting numbers similar to expectations, but the stock is unlikely to gain, as the market has already priced in the company's Jul-Sep earnings. For other pharmaceutical stocks, the movement next week would primarily depend on the broad market.

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Pharma Stocks Outlook for the week (15-19.10.2012)

Pharmaceutical companies' stocks are seen trading in a tight range next week as the industry awaits a final decision on the National Pharmaceutical Pricing Policy After the apex court sought a timeline from the Centre on its decision on drug pricing policy, the government Thursday said it would take a final decision by November last week.

Now, the Cabinet will take a decision on the recommendations of the Group of Ministers on new drug pricing policy once the note is placed before it on Oct 15, the government said. As per the proposals of the ministerial panel, drug prices should be market-based, that is, fixed after taking the weighted average price of all brands having at least 1% or more market share by volume.

While pharmaceutical companies are scouting for a market-based pricing formula, the apex court's directive to go back to cost-based pricing could be a big setback for the drug companies. The upcoming Jul-Sep earnings would also impact movement of stocks.

Companies such as Lupin, Cadila Healthcare, Sun Pharmaceuticals Industries and Cipla are likely to post positive results for the quarter ended September. Movement in mid-cap pharmaceutical stocks would be mainly governed by stock-specific news. Among stocks in the mid-cap pack, Aurobindo Pharma is seen gaining next week as the market is expecting the news of a plant clearance after the US Food and Drug Administration recently visited the company's plant.

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Pharma Stocks Outlook for the week (08 - 12.10.2012)

Movement in pharmaceutical stocks next week would rest on the Supreme Court's decision on the drug pricing policy. Before the apex court's decision Wednesday, the counters in the pack are seen down on the first two days of the week as some industry players feel the government might go with the cost-based pricing formula that, many say, is being favoured by the court. The Supreme Court had on Wednesday asked the government not to alter the existing drug price structure, sparking speculation about the impact of the policy unveiled last week by the government. The ministerial panel on drug pricing had proposed to bring all 348 drugs in the National List of Essential Medicines under price control, which previously had only 74 drugs. As per the proposals of the ministerial panel, the prices of the drugs will be market-based, that is, fixed after taking the weighted average price of all brands having at least 1% or more market share by volume.

While pharmaceutical companies are scouting for a market-based pricing formula, the apex court's directive to go back to cost-based pricing could be a big setback for the drug companies. If the cost-based pricing policy is put in place, many small pharmaceutical companies might be completely wiped out from the industry in a couple of years.

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