When it comes to surviving the Pandemic, almost every second industry is going through a rough patch. The COVID-19 panic has once again set pharma stocks on fire and multiple investors ask if this is the start of another influential bull run.
From Automobiles to big beamed networking companies, everyone has seen their fair share of ups and downs. With the world racing towards finding a vaccine for the fatal corona virus and several companies are showing signs that they could have the solution.
Pharma companies have performed better than most sectors in 2020 owing to increased interest in the sector on the back of COVID-19 pandemic. Other pharma stocks also performed well this year With Cadila Health, Biocon, and Dr. Reddy’s also surging over 40 percent. Currently, India is the largest provider of generic medicines, occupying a market share of 20 percent concerning global supply by volume and fulfills nearly 60 percent of the global demands for vaccines. They also supply nearly 80 percent of the antiretroviral drugs including AIDS in the global markets.
Why should you invest in a pharmaceutical company?
- India is the most prominent and growing industry regardless of the pandemic. It is the reservoir of 60,000 nonexclusive labels covering 60 curative divisions and fabricates more than 500 various Active Pharmaceutical Ingredients (APIs). The API industry is rated third highest in the world offering 57% of APIs to a prequalified list of the WHO.
- Pharma companies are attractive to long-term investors despite the volatility. As healthcare has become an essential and critical part of a consumer’s life, it is easier to get good returns if invested in suitable periods
- Being one of the evolving industries of all times including innovation, scientific breakthroughs, and technological advances can bring exponential growth for many pharma companies
- It is still early to identify the next leader in pharma. The best pointer would be those that are spending more on research and are victorious in producing medications for the next generation diseases, which will be there staring at mankind in a couple of years from now. For instance, Diabetes & Oncology are anticipated to demand topmost consideration & those companies that possess thorough analysis and research in these areas could be a better choice for investment.
Pharmaceutical stocks that you definitely should look into:
- Abbott India: One of India’s fastest-growing pharmaceutical organizations, it is a part of Abbott’s global pharmaceutical company in India and takes pride in contributing high-quality entrusted medications in various remedial categories such as women’s health, gastroenterology, cardiology, etc. Abbott has seen great sales growth (organic: 15% CAGR; inorganic: 18%) in the last 10 years compared to an average 11% increase by distinct Indian pharmaceutical performers.
- Dr. Reddy’s Laboratories: Despite its powerful discovery and aptitudes since commencement, Dr. Reddy’s Laboratories does not yet fall in the top 10 indigenous formulation professionals. Its business in India was never meant to concentrate on the administration, which led to bourse share loss over a span of time. But for the new administrators, India will be a key focus area.
- Biocon India Limited: Biocon is an amazing stock among the Healthcare & Pharma Sector stocks in the Indian market. Looking at the scenario of the last few years in Biocon, the revenue of the Company has been growing rapidly with almost annual growth of 15% per annum. Biocon plunges market funds around 27,186 crore Rs. and having some major competition. It is one of the top performers in Pharma space because of its good quality management and business performance and highly suitable for long term investments.
- Laurus Labs: It is an Indigenous pharmaceutical corporation involved in the study and advancement of current pharmaceutical elements for antiretrovirals and hepatitis C drugs. It claims to be the world’s largest third-party API supplier for antiretrovirals and has spent Rs 900 crore over the previous years to develop potential, which has led to negative free cash flow.
- Zydus Cadila limited: Cadila Healthcare Limited is an Indian pharmaceutical firm situated in Gujarat, India. The organization is one of the leading pharma companies in India, with total revenue of ₹7,104.30 crores in 2019. After the launch of their COVID-19 drug ‘remdesivir’ in 2020, it has given more promising results and has been rising ever since
- Ajanta Pharma: Ajanta Pharma Limited is a multinational organization based in India involved in the expansion, production, and retailing of pharmaceutical formulations. It has a presence in India, the United States, and about 30 other countries in Africa, Asia, the Middle East, and CIS. For the quarter closed on June 2020, the group has published Consolidated gains of Rs 668.20 Crore, down -2.02 % from last quarter Sales of Rs 681.96 Crore and up 9.19 % from last year same quarter. Thus, it has been following the uptrend pattern as per the quarterly reports.
Despite the ostensibly charming correspondence between the COVID-19 crisis and pharma or healthcare reimbursements, investing in sector funds is an extremely risky business. The giddy-up and down cycle in this very sector shows how investors can be caught off guard. All but the most mature investors should stay well away from sector funds. But one can’t deny the fact the healthcare industry has rallied up more than it was expected to be with all the new advancements. If you are really confident about the sector, continue in a staggered manner, research, and learn about its performances. If you don’t have a DEMAT account or a financial advisor yet, we’d suggest you subscribe to one (available on our Investallign website). Do not invest more than 10% of your portfolio in pharma stocks if you are unsure. Also, hit us up if you have any questions regarding the same.