BSE Healthcare Index, which tracks healthcare service providers and pharmaceutical companies, closed at its new all-time high on Friday with broader markets also rallying amid improvement in US jobs data, a key indicator of US economy.
According to analysts tracking the sector, apart from strong growth seen in US markets, the index is reflecting the improvement in domestic market. “Domestic pharma market has shown signs of improvement. Domestic growth rate has improved from -1.7% in October to 6.9% in November,” said Ranjit Kapadia, senior vice-president, pharma, Centrum Broking.
On Friday, Divi’s Laboratories touched a 52-week high, before closing 3.57% higher at R1,221, Cipla was up 1.73% at R405.90, Sun Pharmaceutical Industries 1.03% at R576.30 and Glenmark Pharma was up 1.09% at R538.90. Glaxosmithkline Pharma also touched a 52-week high before closing marginally higher at R2,958.45.
As per IMS Health, which provides information on pharma industry, the domestic market is stabilising. “The pharma market has remained almost static for the past five months, moving within a narrow range of R6,700-6,900 crore. After the dip in growth during August-September following the Drug (Prices Control) Order, 2013, market has seen a steady improvement, as it grappled with this new policy and gradually stabilised,” said Kumar Hinduja, senior director, strategy planning and business development, IMS Health. “While some challenges remain, particularly trade margin issues, we see an improving trend in this segment,” he added.
Year-to-date, the healthcare index has gained 22.82%. Divi’s Laboratories has gained 10.73%, Sun Pharmaceuticals is up 56.49%, while Glaxosmithkline Pharmaceuticals has gained 36.6% YTD.
Experts feel negatives have been discounted. “It is prudent to remain invested in the pharma stocks. Several mid-cap companies have touched 52-week highs over last two weeks due to re-rating of the sector,” added Kapadia.