Pharma Stocks Outlook for the week – 06 to 10.2016
(Seen subdued next week; Sun Pharma may
rebound)
( www.rupeedesk.in )
Shares of most pharmaceutical companies are likely to be subdued
in the coming week, continuing the trend seen in the last few sessions on account of
their disappointing Jan-Mar results. Overall, the quarter saw a 360 bps EBITDA margin miss
on rising R&D (research and development) costs, price erosion in the US, and EM
(emerging markets)
currency headwinds.
With no respite seen on any of these fronts, FY17 is unlikely to
be any better. Among stocks, Glenmark Pharmaceutical, this was the worst hit after Sun
Pharmaceutical Industries this week.
Sun Pharmaceutical Industries, though, is showing signs of
recovery and may rise towards 762 rupees. The stock witnessed a sharp decline this week
on account of its weak 8-10% guidance for 2016-17 (Apr-Mar). The management also
said remedial work at Halol unit is progressing well and the company plans to
send a request to the US Food and Drug Administration to re-inspect the plant by
June-end.
Remedial measures are a key factor for pharmaceutical companies
over the medium term as most of them are facing regulatory issues. Resolution of
USFDA issues (including Form 483s) would provide clarity and result in new
product approvals which have been getting delayed.
