• Invest
    Investment Suite
    Stocks
    Mutual Funds
    Future and Options
    IPO
    Exchange Traded Funds
    Commodity
    Stockcase (Stock Baskets)
    Currency
    Non Convertible Debentures
    Sovereign Gold Bond
    Exclusive
    NRI Account
    Private Client Group
    Features
    SipIt
    MTF
    Investment Suite
    Exclusive
    Features
  • Platform
    Product Suite
    Kotak Neo App & Web
    Nest Trading Terminal
    NEO Trade APIs
    Features and Tools
    MTF
    Securities Accepted as Collateral
    Margin Requirements
    Payoff Analyzer
    Calculators
    SIP Calculator
    Lumpsum Calculator
    Brokerage Calculator
    Margin Calculator
    MTF Calculator
    All Calculators
    Product Suite
    Features and Tools
    Calculators
  • Pricing
  • Research
    Research Calls
    Long Term calls
    Short Term calls
    Intraday calls
    Derivatives calls
    Pick of the week
    Top Monthly Picks
    Research Reports
    Fundamental Research Report
    Technical Research Report
    Derivative Research Report
    Research Calls
    Research Reports
  • Market
    Stocks
    Market Movers
    Large Cap
    Mid Cap
    Small Cap
    Indices
    Nifty 50
    Bank Nifty
    FinNifty
    Nifty Midcap India
    VIX
    All Indian Indices
    Mutual Funds
    SBI Mutual Funds
    HDFC Mutual Funds
    Axis Mutual Funds
    ICICI Prudential Mutual Funds
    Nippon India Mutual Funds
    All AMC's
    IPO
    Upcoming IPO
    Current IPO
    Closed IPO
    Recently Listed IPO
    Stocks
    Indices
    Mutual Funds
    IPO
  • Learn
    Resource
    Market Ready
    Kotak Insights
    Infographic
    Podcast
    Webinars
    Youtube Channel
    Quarterly Results
    Investing Guide
    Demat Account
    Trading Account
    Share Market
    Intraday Trading
    IPO
    Mutual Funds
    Commodities
    Currency
    Futures & Options
    Derivatives
    Margin Trading
    Events
    Budget 2024
    Muhurat Trading
    Share Market Holiday
    Market Outlook 2024
    Resource
    Investing Guide
    Events
  • Partner
    Business Associates
    Fund Expert
    Kotak Connect Plus
    Startup connect
  • Support
    FAQs
    Circulars
    Bulletins
    Contact Us
    Forms Download
    Get your Statement

A New Dawn on the Horizon For Indian Pharma Stocks

  •  5 min read
  • 0
  • 23 Aug 2024
A New Dawn on the Horizon For Indian Pharma Stocks

Ever since I started wearing an Apple Watch about a year ago, I have become more attuned to the various health metrics it tracks.

How many steps was I taking per day?

What was my resting heart rate?

How many hours a night did I sleep?

How did my heart rate variability change over time?

This newfound awareness made me realise how much technology can influence our understanding of personal health.

I'm assuming that I’m not the only one experiencing this switch.

As more people become engaged with their own health data, it’s clear that the demand for personalised healthcare is on the rise.

This trend has significant implications for the pharmaceutical sector, driving innovation in areas such as precision medicine, digital therapeutics, and patient-centred care.

You see, healthcare impacts everything and everyone, regardless of their economic or social status.

Take Covid-19 for example. It starkly highlighted how robust healthcare systems can stabilise economies while inadequate infrastructure can bring them to a standstill.

As things are in 2024, the prospects of the Indian pharma sector look really good, all thanks to two big changes that have happened recently.

With a population exceeding 1.4 billion, India isn't just a vast market within the global healthcare landscape. India's healthcare system is increasingly poised to cater to the needs of an ageing and affluent global population.

As India aspires to become a global pharma leader, just offering cheaper medicines cannot be the only solution.

Enter the US Biosecure Act!

This Act is designed to safeguard vital US biopharma research by limiting state funding to American entities that engage with suppliers from certain countries that pose national security risks (think China and Russia).

While this Act has still not been enacted, if it does, it will restrict technology transfers to these countries’ firms.

You see, the US pharmaceutical industry is heavily dependent on China for outsourced research and development, as well as contract manufacturing. However, rising tensions between the US and China have underscored the risks of relying so heavily on China for such a crucial sector. This is where the Biosecure Act comes into play.

Because of China’s loss, India is becoming a compelling option for major pharmaceutical companies in the US.

On top of the Biosecure Act, another factor impacting the Indian pharma sector is the drug shortage in the US.

In fact, the US has seen very little innovation and large outcomes in its healthcare ecosystem, which explains why American healthcare is worse than many other places around the world.

The persistent drug shortage has had serious consequences for patients, leading to higher costs and delays in receiving necessary care.

Enter India.

The country has consistently risen to the occasion when the world needed support. During the COVID-19 pandemic, Indian pharmaceutical companies delivered over 298 million vaccines to 100 countries through the Vaccine Maitri initiative.

The third and final factor that’s come into play to support the pharma sector is growing exports.

One of India’s greatest strengths lies in its ability to export generic medicines to countries in search of cost-effective healthcare solutions.

Indian pharmaceutical companies command a significant portion of the global export market. These medicines are produced, researched, and tested at a fraction of the cost, making them highly affordable. India's contribution has been crucial in reducing healthcare expenses in developed nations like the US and the UK.

In FY24, India’s drugs and pharmaceuticals exports increased 9.7% year-on-year to US$ 27.9 billion.

The government has even rolled out 2 production-linked incentive (PLI) schemes to promote domestic manufacturing of key pharmaceutical ingredients and generic medicines.

With exports on a steady rise and all other factors coming into play, the stage is set for pharma companies.

Companies supplying to the US market should be on your watchlist as they could perform better on account of increased exports, consistent performance in international trade, and increased production of drugs.

However, they should have compliant facilities and track record, a focus on R&D, strong relations with US-based clients, and decent exposure to the business from the US.

Some top companies that export to the US include Sun Pharma, Aurobindo Pharma, Suven Pharma, Syngene International, Biocon, and Gland Pharma.

Other potential beneficiaries could be Piramal Pharma, Laurus Labs, Alkem Labs, Neuland Laboratories, Shilpa Medicare, Cipla and Vimta Labs.

India's pharma sector aspires to reach the milestones of US$130 billion by 2030 and US$ 450 billion by 2047. This looks achievable from here on, but some regulatory and pricing pressures could prove as roadblocks along the way.

On top of that, the US health regulator – USFDA – might just take it up a notch with its inspections. This has remained the trend post-pandemic.

Several warning letters and import alerts have resulted in delays in product launches, translating into supply penalties and significant costs for remedial measures.

Moreover, geopolitical tensions and possible changes in government policies could significantly impact the future trajectory.

Thorough research and careful analysis are crucial for investors. By examining individual companies' strategies, risk factors, and financial stability, investors can make well-informed choices and position themselves to capitalise on the revival of the Indian pharmaceutical sector.

What do you think, dear reader? Is the Indian pharma sector all set to re-rate and chart its growth trajectory soon?

Happy Learning!

==========================================================================

Sources and References:

  1. WORLDOMETERS
  2. PIB
  3. ECONOMICTIMES
  4. BIOVOICENEWS

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.

Did you enjoy this article?

0 people liked this article.

What could we have done to make this article better?

Enjoy Free Demat Account Opening
+91 -

personImage
Enjoy Free Demat Account Opening
+91 -