Pharma Stocks Outlook
for the week – 15 to 18.11.2016
Pharmaceutical stocks are likely to remain rangebound next
week as investors will look for clues on
growth of the generic drug industry after Donald Trump won
the US presidential election.
Pharmaceutical stocks may continue to feel the impact of a
bearish market sentiment as the future
of Obamacare, incumbent President Barack Obama's signature
health law, looks bleak. A cut in
budget allocation for the healthcare programme might hit the
Indian pharmaceutical industry,
which contributes 40-50% of the generic drugs supply in the
US.
Pharmaceutical stocks, which generally do not exhibit such
movement, have been volatile over the
entire week as investors eyed the US presidential Elections.
The stocks look neutral with downward
bias in the next week. Sun Pharma, which reported a 117%
on-year rise in Jul-Sep consolidated net
profit at 22.3 bln rupees on Friday.
However, see volatility in pharmaceutical stocks as a result
of an overall poor market sentiment and
earnings season. Around 40% of the generic medicine supply
to the US goes from India as the
latter is a low-cost manufacturing base. Thus, any
disruption in this segment will have some effect
on the industry.
Interestingly, shares of pharmaceutical companies had risen
after Trump won the US presidential
election on Wednesday on some relief as his opponent
Democrat Hillary Clinton's policies towards
the generic drug industry were seen as a negative for the
sector.
