Pharma Stocks Outlook For The Week – 20 To 24.11.2017
Pharma Stocks Outlook For The Week – 20 To 24.11.2017
Most investors, even those taking contrarian calls on certain pharmaceutical stocks, are expected to avoid the sector after Lupin received a combined warning letter for its facilities in Goa and Pithampur
in Madhya Pradesh. There was some contra buying happening in pharmaceutical stocks. But Lupin's warning letter has led even those investors away from the sector. The view over pharmaceutical stocks has been weak over the past two years, but in the last few months, some market participants
expected regulatory issues for companies to wane and pricing pressure to stabilise. However, since
Nov 7, when Lupin came up with the adverse news, the Nifty Pharma index has declined over 7%,
registering on-week declines for both weeks. Last week, Lupin received a combined warning letter from the US Food and Drug Administration for its Goa and Pithampur plants for repeated violations of good manufacturing practices, which, the regulator said, suggested the company lacked proper oversight over its manufacturing processes. The warning letter to Lupin's two facilities may also weigh on sentiment for Sun Pharmaceutical Industries, which is awaiting a US FDA audit of its Halol plant in Gujarat after completing remediation. India's largest pharmaceutical company had received a warning letter for its facility in December 2015. Last December, the facility received multiple observations from the regulator after a reinspection. Earlier this week, the sun pharma company's Managing Director Dilip Shanghvi said Sun Pharma had no update as to when the US regulator would audit its biggest facility. Adding to the pharma sector's woes, especially of Lupin and Cipla, will be the removal of the two stocks from the BSE Sensex index, effective Dec 18. Removal from the benchmark index may lead to selling in the stocks by Sensex exchange traded funds, which may put further pressure on prices. PSU refiners likely to consolidate next week Most pharma companies are guiding for more pricing pressure in the next two or three quarters, so the rest of the fiscal is also seen weak. Faster drug approvals by US FDA will also put pressure on prices as markets for various drugs will get crowded. However, the outlook for the domestic market is stable, as the effects of price control, demonetisation and rollout of the goods and services tax had waned. After liquidation of inventories by domestic distribution channels in June, most companies reported re-stocking by the channels following the rollout of GST on Jul 1, which boosted domestic revenues for drug-makers for the September quarter.
Source : Cogencis Information Services Ltd.
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Pharma Stocks Outlook For The Week – 20 To 24.11.2017
in Madhya Pradesh. There was some contra buying happening in pharmaceutical stocks. But Lupin's warning letter has led even those investors away from the sector. The view over pharmaceutical stocks has been weak over the past two years, but in the last few months, some market participants
expected regulatory issues for companies to wane and pricing pressure to stabilise. However, since
Nov 7, when Lupin came up with the adverse news, the Nifty Pharma index has declined over 7%,
registering on-week declines for both weeks. Last week, Lupin received a combined warning letter from the US Food and Drug Administration for its Goa and Pithampur plants for repeated violations of good manufacturing practices, which, the regulator said, suggested the company lacked proper oversight over its manufacturing processes. The warning letter to Lupin's two facilities may also weigh on sentiment for Sun Pharmaceutical Industries, which is awaiting a US FDA audit of its Halol plant in Gujarat after completing remediation. India's largest pharmaceutical company had received a warning letter for its facility in December 2015. Last December, the facility received multiple observations from the regulator after a reinspection. Earlier this week, the sun pharma company's Managing Director Dilip Shanghvi said Sun Pharma had no update as to when the US regulator would audit its biggest facility. Adding to the pharma sector's woes, especially of Lupin and Cipla, will be the removal of the two stocks from the BSE Sensex index, effective Dec 18. Removal from the benchmark index may lead to selling in the stocks by Sensex exchange traded funds, which may put further pressure on prices. PSU refiners likely to consolidate next week Most pharma companies are guiding for more pricing pressure in the next two or three quarters, so the rest of the fiscal is also seen weak. Faster drug approvals by US FDA will also put pressure on prices as markets for various drugs will get crowded. However, the outlook for the domestic market is stable, as the effects of price control, demonetisation and rollout of the goods and services tax had waned. After liquidation of inventories by domestic distribution channels in June, most companies reported re-stocking by the channels following the rollout of GST on Jul 1, which boosted domestic revenues for drug-makers for the September quarter.
Source : Cogencis Information Services Ltd.
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