Pharma Stocks Outlook
for the week – 11 to 15.07.2016
(Positive Bias as
regulatory concerns ease)
Stocks of pharmaceutical companies may continue to trade
with a positive bias next week due to
easing regulatory concerns, but some profit booking at
higher levels is likely following the recent
gains. The Nifty pharma index has surged 8.5% in two weeks.
The recently has announced of news that manufacturing plants
of a number of pharma companies have been cleared by the US Food and Drug Administration has
given some optimism.
Cadila Healthcare's Moraiya facility in Gujarat, which was
issued a warning letter in December, has
received an Establishment Inspection Report from the US FDA,
indicating the closure of the inspection carried out by the regulator during Aug 28-Sep 5,
2014. The company, however, said that
this establishment report does not indicate complete
resolution of issues highlighted in the warning
letter.
Stocks of Cadila Health rose nearly 10% this week. Lupin
share could see some correction after rising nearly 6% this week as its Dabhasa unit has received Form
483 from the US FDA with two
observations.
However, the downside is seen limited and overall outlook
remains positive for Lupin as its Goa unit
has received an Establishment Inspection Report from the US
FDA for the inspection carried out in
July 2015. However, the regulator is still reviewing the
responses sent by the company on the
observations made during the inspection in March. The
regulator issues an establishment inspection
report upon successful completion of a site inspection.
The easing of regulatory issues has lifted sentiment but
some correction is likely ahead of the Apr-Jun
earnings, which will be declared in coming weeks.