Nifty Pharma index hits 7-week high
The Nifty Pharma index hit a seven-week high of 9,629.7, on Thursday on the back of positive news flow for Divi’s Laboratories and Dr Reddy’s Laboratories.
The US Food and Drug Administration’s clearance to the facilities of Dr Reddy’s Laboratories, and minor observations in audit inspections at plants of Divi’s Labs boosted stock prices. While Dr Reddy’s gained the highest, 7.4 per cent, on Thursday, Divi’s Labs gained 5 per cent to end at ~2,486 and ~990, respectively, on the NSE.
Divi’s Labs has also been the highest gainer in the past one month, registering a gain of 59 per cent. “The inspection was for full cGMP (current good manufacturing practices) and verification of all corrective actions proposed against the previous inspection observations. Divi’s Laboratories announces that all previous observations have been confirmed as completed and resolved,” the company said in a stock exchange filing. The successful implementation of the post-audit corrective plan is expected to pave the way for the lifting of the import alert, which was issued when the USFDA pointed some manufacturingrelated issues earlier.
Similarly, Dr Reddy’s got a boost because of Unit II of its formulation facility at Srikakulam plant in Andhra Pradesh received an establishment inspection report from the USFDA. “We believe a promising complex generics pipeline equips Dr Reddy’s to battle headwinds in the US market,” said Deepak Malik of Edelweiss Securities.
Pharma sector stocks have been slow this year, as they under-performed the broader market indices on pricing and regulatory concerns. But the sector has reversed its losses in recent trading sessions.
Last week, Credit Suisse upgraded the Sun Pharma stock to “outperform” rating. Sun Pharma’s profit is expected to surge at a compound annual growth rate of 20 per cent between 2019 and 2022 because of growth in its specialty drug business, the brokerage said. Sun Pharma stock has gained over 12 per cent in a month and closed at ~519.55 on Thursday.