A Sectoral Overview: NIFTY Pharma

Introduction 

 

Please note: All the data used below is used as of 23rd June 2021 (EOD), the website used for data is www.screener.in and the website used for charts is www.tradingview.com.

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NIFTY Pharma Past Price Movement

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Over the past two decades, the pharmaceutical sector has exploded in India. The NIFTY Pharma index, the benchmark of the performance of the pharmaceutical sector in India, has the base value of 1000 and the base date of January 1, 2001.

 

As can be seen in the chart above, it is worth 14000 today/ This translates to a 14 times return in about 20 years. This phenomenal  movement of the value of the index is attributed to the fundamental boom in the pharmaceutical sector in India.

 

Today, India is the world's top supplier of generic medicines. According to the statistics provided by IBEF, the Indian pharmaceutical sector supplies more than half of worldwide demand for vaccines, 40% of generic demand in the United States, and 25% of all medication in the United Kingdom. India is the world's third-largest producer of pharmaceuticals by volume and the fourteenth-largest producer by value. A network of 3,000 pharmaceuticals firms and 10,500 manufacturers make up the domestic pharmaceutical sector.

 

This blog discusses the 10 constituents of the NIFTY Pharma index. Even though a lot of pharmaceutical companies exist which are not a part of the index, the index in itself is pretty reliable since most of the pharmaceutical output of the country is produced by these 10 constituents.

 

Constituents of NIFTY Pharma

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Pie Chart: Constituents of NIFTY Pharma

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1. Alkem Laboratories Ltd: 

 

Current Price: Rs. 3,110

52 week High/ Low: Rs. 3,259/2301 

Market Cap: Rs. 37,207Cr

P/E: 23.5

ROE: 23.4%

 

Alkem Laboratories Past Price Movement

Pharmaceutical business Alkem Laboratories Limited develops, produces, and distributes pharmaceutical and nutraceutical products in India and abroad. Alkem Laboratories offers a vast variety of products including pharmaceutical drugs, ingredients, nutraceuticals in acute and chronic therapeutic areas, vitamins, minerals and other nutrients, neurology products, etc. It was founded in 1973 and is headquartered in Mumbai, India.

 

2. Aurobindo Pharma Ltd: 

 

Current Price: Rs. 944

52 week High/ Low: Rs. 1064/738

Market Cap: Rs. 55,342 Cr

P/E: 10.4

ROE: 27.5%

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Aurobindo Pharma Past Price Movement

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Aurobindo Pharma Limited is an Indian pharmaceutical company that conducts research, develops, manufactures, and sells a variety of pharmaceutical products. Oral solids, injectables, over-the-counter medicines, and nutritional supplements, as well as active pharmaceutical components and final dosage forms, are the company's main products.

 

In addition to the aforementioned products, Aurobindo Pharma or Auro Pharma also manufactures peptides and biocatalysts. Biosimilars, transdermal patches, inhalers, vaccinations, and depot injections are also in the works. In addition, the firm exports its goods to around 155 nations. COVAXX has agreed to work with the firm to develop and market the COVID-19 Vaccine UB-612 for India and UNICEF. Aurobindo Pharma Limited is based in Hyderabad, India, and was formed in 1986.

 

(Similar read: A sectoral overview: NIFTY IT)

 

3. Biocon Ltd: 

 

Current Price: Rs. 398

52 week High/ Low: Rs. 488/363 

Market Cap: Rs. 47,730

P/E: 65.2

ROE: 10.2%

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Biocon Past Price Movement

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Biocon Limited is a biopharmaceutical business that makes medicines, as well as medicinal chemicals and botanical products. Small Molecules, Biologics, Branded Formulations, and Research Services are the company's segments.

 

It focuses in the areas of diabetes, oncology, immunology, dermatology, ophthalmology, neurology, rheumatology, and inflammatory diseases. Its products include biosimilars comprising insulin and other biopharmaceuticals, small molecules including pharmaceutical ingredients and branded formulation products under the sugen, Basalog, BIOMAb EGFR, CANMAb, and ALZUMAb brands.

 

The company serves customers in approximately 120 countries. Biocon Limited was founded in 1978 and is headquartered in Bengaluru, India.

 

 

4. Cadila Healthcare Ltd:

 

Current Price: Rs. 624

52 week High/ Low: Rs. 674/347 

Market Cap: Rs. 63,851 Cr

P/E: 27.8

ROE: 19.6%

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Cadila Healthcare Past Price Movement

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Cadila Healthcare Limited is a pharmaceutical company that conducts research, development, manufacture, marketing, and distribution in India, the United States, and globally. It provides final dosage human formulations such as generics, branded generics, and speciality formulations such as biosimilars and vaccines, as well as active pharmaceutical ingredients, animal healthcare products and consumer wellness products.

 

The company offers products in the therapeutic areas of pain management, neurology, liver diseases, etc. The company is developing drugs in a myriad of domains ranging including oncology, autoimmune disease, nephrology, ophthalmology, etc. It provides animal healthcare products  including poultry vaccines and a variety of consumer wellness products.

 

Sugar Free and Sugarlite; Complan; EverYuth, a line of skincare products; Nycil, a prickly heat powder; Glucon-D glucose powder; Sampriti Ghee; Nutralite; and other items are among the company's consumer health offerings. The company also engages in the retail pharmacy, and manpower supply and administration activities. Cadila Healthcare Limited was founded in 1952 and is headquartered in Ahmedabad, India.

 

 

5. Cipla Ltd: 

 

Current Price: Rs. 958

52 week High/ Low: Rs. 982/621

Market Cap: Rs. 77,258 Cr

P/E: 32.1

ROE: 14.1%

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Cipla Past Price Movement

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Cipla Limited manufactures and distributes pharmaceutical goods in India, the United States, South Africa, and other countries through its subsidiaries. The firm provides active pharmaceutical ingredients and formulations in a variety of therapeutic areas, including heart failure, hypertension, arrhythmia, lipid abnormalities, diabetes, obesity, HIV, respiratory, cancer, etc. It also provides respiratory products, including inhalers and nasal sprays,

 

As an effort towards the current covid-crisis, the company is working with CSIR-Indian Institute of Chemical Technology for the development of medication , with Karwa Ltd. for the commercialization of antibody detection kits and with the Premier Medical Corporation Private Limited for the commercialization of the rapid antigen test kits. The company was founded in 1935 and is headquartered in Mumbai, India.

 

 

6. Divi's Laboratories Ltd: 

 

Current Price: Rs. 4,225

52 week High/ Low: Rs. 4,427/2,090

Market Cap: Rs. 112,176 Cr

P/E: 56.5

ROE: 23.9%

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Divi's Laboratories Past Price Movement

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Divi's Laboratories Limited manufactures and sells generic active pharmaceutical ingredients (APIs) and intermediates in the United States, Asia, Europe, and internationally. The company also undertakes custom synthesis of APIs and intermediates; and supplies a range of carotenoids, as well as markets vitamins to nutritional, pharma, food/beverage, and feed industries.

 

The company was formerly known as Divi's Research Center and changed its name to Divi's Laboratories Limited in 1994. Divi's Laboratories Limited was founded in 1990 and is headquartered in Hyderabad, India.

 

 

7. Dr. Reddy's Laboratories Ltd:

 

Current Price: Rs. 5,299

52 week High/ Low: Rs. 5,515/3,814

Market Cap: Rs. 88,171 Cr

P/E: 45.2

ROE: 11.7%

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Dr. Reddy's Laboratories Past Price Movement

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Dr. Reddy's Laboratories Limited operates as an integrated pharmaceutical company worldwide. It operates through three segments: Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary Products.

 

The Global Generics segment manufactures and markets prescription and over-the-counter finished pharmaceutical products, The PSAI segment manufactures and markets active pharmaceutical ingredients and intermediates and the Proprietary Products segment focuses on the research, development, and manufacture of differentiated formulations for dermatology and neurology therapeutic areas. The company was founded in 1984 and is headquartered in Hyderabad, India.

 

(Also read: Different types of NIFTY Indices)

 

 

8. Lupin Ltd:

 

Current Price: Rs. 1,154

52 week High/ Low: Rs. 1,268/828

Market Cap: Rs. 52,298 Cr

P/E: 43.0

ROE: 9.24 %

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Lupin Price Movement

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Lupin has a global presence and is particularly active in India, United States and Japan. The firm develops and commercialises different drug delivery systems, as well as biosimilar medicines, for use in the therapeutic areas of cardiovascular, diabetology, and asthma, among others.

 

In addition, the firm offers over-the-counter medicines, contract manufacturing and supply services, and drug discovery and development projects in cancer, immunology, and metabolic diseases, as well as bio clinical research.

 

Lupin Limited has a licensing, development, and commercialization agreement with Boehringer Ingelheim for Lupin’s MEK inhibitor compound (LNP3794) as a potential targeted therapy for patients with cancers. Lupin was founded in 1968 and is based in Mumbai, India.

 

 

9. Sun Pharmaceutical Industries Ltd:

 

Current Price: Rs. 665

52 week High/ Low: Rs. 722/452

Market Cap: Rs. 159,700 Cr

P/E: 55.0

ROE: 6.33 %

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Sun Pharmaceutical Past Price Movement

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Sun Pharmaceutical Industries Limited is a generic pharmaceutical business that develops, produces, and sells branded and generic formulations as well as active pharmaceutical ingredients (APIs) in India and across the world.

 

It is the biggest and the most trusted player in the Pharmaceutical sector in India. The firm provides formulations in a variety of medicinal fields and provides a vast variety of over-the-counter products globally. Sun Pharmaceutical Industries Limited was founded in 1983 and is based in Mumbai, India.

 

 

10. Torrent Pharmaceuticals Ltd:

 

Current Price: Rs. 2,904

52 week High/ Low: Rs. 3,040/2,232

Market Cap: Rs. 49,104 Cr

P/E: 39.2

ROE: 23.5 %

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Torrent Pharma Past Price Movement

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Torrent Investments Private Limited owns Torrent Pharmaceuticals Limited. Torrent Pharmaceuticals Limited is a generic pharmaceutical formulations research, development, manufacturing, and marketing company with operations in India, the United States, Germany, Brazil, and other countries. 

 

Similar to the other constituents of NIFTY Pharma, Torrent Pharmaceuticals sells items in a variety of therapeutic areas. The company is located in Ahmedabad, India, and was formed in 1959.

 

(Related read: Big Data applications in Pharma Industry)

 

 

Final Note

 

Almost all of the constituents of NIFTY Pharma are near their 52 week highs and excluding Sun Pharmaceuticals and Lupin, the rest of the constituents are near their all time highs. This reaffirms the current bullish trend visible in the Pharmaceuticals sector.

 

The NIFTY Pharma Index has a P/E ratio of 35.92 as against the P/E ratio of NIFTY 50, which is 29.22. The higher P/E ratio establishes the confidence of investors in the earnings growth of the companies comprising NIFTY Pharma and therefore the pharmaceutical sector. 

 

(Similar blog: A sectoral overview: NIFTY Metal)

 

Most of the pharmaceutical companies constituting the NIFTY Pharma discussed above have flawless balance sheets and are established dividend payers, therefore, the higher price demanded by this sector may be justifiable. 

 

Regardless of the current valuations, the NIFTY Pharma has seen a commendable performance over the past 2 decades and has outperformed the NIFTY 50 index and therefore provides a great diversification opportunity for investors all over the world.