Pharmaceutical Stocks Soar by Up to 9.5% in the US, With Glenmark Leading the Surge on Renewed Optimism

01 Oct, 2023

Pharmaceutical Stocks Soar by Up to 9.5% in the US, With Glenmark Leading the Surge on Renewed Optimism

On Friday, pharmaceutical stocks experienced a notable surge of up to 9.5%, contributing to a 3% increase in the Nifty Pharma index. Glenmark emerged as the top gainer, with its shares rising by 9.5% to reach an intraday high of Rs 854.60. This surge came after S&P Global revised the company's outlook to positive, following the proposed stake sale in Glenmark Life Sciences (GLS).

Aurobindo Pharma also saw its shares climb by nearly 6% to an intraday high of Rs 930 on the NSE. This increase was driven by reports indicating that the company had received approval to launch the Revlimid drug, which is used in combination with other medications for the treatment of adult patients with multiple myeloma.

Meanwhile, Dr. Reddy's Laboratories experienced a rally of over 3% following the incorporation of a step-down wholly-owned subsidiary. The company's Switzerland unit established Dr. Reddy’s Laboratories Jamaica Limited, a wholly-owned subsidiary in Jamaica. This new subsidiary will focus on importing, warehousing, distributing, and exporting pharmaceuticals, as stated in a BSE notification.

Several other pharmaceutical companies also witnessed an uptrend in their stock prices on Friday. Abbott India, Torrent Pharmaceuticals, Divi's Laboratories, Gland Pharma, GlaxoSmithKline Pharmaceuticals, Granules India, Alkem Laboratories, Sun Pharmaceuticals, Cipla, Zydus Lifesciences, Natco Pharma, Laurus Labs, IPCA Laboratories, Biocon, and more. Sanofi saw their shares rise by up to 3%.

A report from Systematix Institutional Equities highlighted the potential for Indian generic pharmaceutical companies in the US market. It noted that a significant number of drugs with expired patents in the US have either not faced generic competition or have limited competition, making them substantial markets for generic drug manufacturers. This presents an opportunity for Indian players, as approvals for new complex generics may offset the revenue erosion in their existing portfolios.

The report further stated, "In an optimistic scenario, assuming that Indian generic pharmaceutical companies can successfully develop generic versions of these off-patent complex drugs that represent..." 90 percent of the market opportunity, the incremental cumulative peak sales Indian players could generate from these products could offset the revenue erosion in their existing complex generic portfolios, estimated at $1,250 million."