Pharma Sector to Outperform in 2010

In an earlier article – July Could be Jittery For the Markets - about equity market, our analyst Rahul advised you to be cautious while investing in equity market in the month of July (click here to read). Thus it becomes extremely important to select the sector in which to invest. Rahul again comes to your rescue with his views on pharma sector

  • The share of top 20 pharma companies in India including global MNCs today is around 58% with takeovers and mergers happening fast over the last few years
  • Even more acquisitions are on the cards, as the Indian pharma sales are expected to more than double in the next 5 years
  • The recent acquisition of Piramal Healthcare’s formulation business by the US based Abbott Lab at almost 9 times Piramal’s Sales at $ 3.72 bn has made headlines
  • Within next 2 years patents worth more over $70 bn would expire and this will also give huge oppurtunity to the Indian generic makers
  • A recent study carried out by HDFC Securities identifies 34 Indian companies as having positioned themselves to tap this emerging opportunity

Dr Reddys could be one of the key benefeciaries of this

Thus, I believe that the Indian pharma space offers good investment oppurtunities for long term investors, since it offers a blend of both growth and defense and this ongoing consolidation act can also lead to good short team positive surprises for investors. Some of such stocks in the space is Novartis India Limited, Glenmark Pharama, Lupin, etc. Will update you all in details regarding them in details sometime later.

Author:Rahul Sonthalia, Research Head, Kredent

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