Raising hopes of the biggest healthcare reforms in the US since the 1960s and making healthcare more affordable to Americans, the re-election of US President Barack Obama has spelled good news for Indian generic drug manufacturers with exposure to US markets.
The optimism was seen in Indian pharmaceutical space as the BSE Healthcare index gained 1% to its 52-week high of 7,898.31 following reports of Obama?s re-election. Eventually, the index closed the day 7,859.57, up 42.19 points or 0.5% from its close on Tuesday.
Stocks like Sun Pharma, Dr Reddy?s Laboratories, Ranbaxy, Wockhardt, among others, gained in the range of 0.5-1% on Wednesday before paring some gains.
Experts say that Obama?s re-election, which could lead to another ?risk-on? rally, removes the prevailing uncertainty about his universal health care and would significantly aid Indian generic drug manufacturers having geographical presence in the US market.
One of the higlights of the first phase of Obama?s presidency was the Patient Protection and Affordable Care Act, popularly called Obamacare, requiring most Amercians to have health insurance. While there is criticism that this favours the big insurance companies and futher drives up cost, this continues to open new opportunities to generics manufacturers from India.
?It (Obama?s re-lection) will be positive for affordable healthcare in generic drugs,? said Kiran Mazumdar-Shaw, CMD of biotech firm Biocon. ?In the US, over 75% medicines are generic. So, the Indian pharmaceutical sector is going to gain in the US.?
?I think President Obama?s re-election would augur well for the industry,? says Kamal Sharma, MD, Lupin, which derives 36% of its revenues from the US. ?The US Healthcare Bill was indeed a landmark move by the Obama administration, and one that promises to make affordable healthcare a reality for millions of hitherto uninsured Americans. We believe that generics manufacturers will undoubtedly stand to gain over the long term. The widening of coverage would benefit both the brands as well as generics businesses in the US market,? he explained.
?ObamaCare would go ahead, which would be beneficiary for the Indian drug industry,? said Balaji Prasad, managing director of global equity research, Barclays Capital India.
Prasad maintained his positive view on Indian pharmaceutical stocks, owing to our strong revenue and earnings forecasts for the medium to long term. Indian generic drug companies could see 20% volume growth in US prescription share, which could boost topline growth of these companies from the US businesses,? Prasad added.
The 2010 Patient Protection and Affordable Care Act aims to extend health coverage to more than 30 million uninsured Americans beginning in January 2014 and overhaul the $2.8 trillion US healthcare system.
