Drug companies in pink of health, further upside expected
healthcare companies boosted by their status of being sound bets in challenging stock market conditions. Analysts expect many of these stocks to extend recent gains as improved sector prospects and a slowdown in the domestic economy could continue to drive investor appetite for companies with global exposure.
Nifty's Pharma and Healthcare indices have gained 1.7% and 2.6% respectively in the past month, while the benchmark Nifty declined 2% in this period.
«The pharmaceutical sector has demonstrated notable improvement in recent quarters, driven by better performance in the US generics market, robust results in branded markets, and a moderation in raw material costs,» said Prathamesh Masdekar, research analyst at StoxBox. «As we advance, most pharma companies are expected to achieve 12-15% growth in 2025 amid a focus on new product launches, increased volume growth, and rising demand for generics and branded products.»
He expects pharma companies focusing on US businesses to grow strongly due to ongoing drug shortages, new product launches, and a shift towards specialty products and niche molecules. Sun Pharma, Dr Reddy, Cipla, Divis, Glenmark Life Sciences, and Piramal Pharma stocks are likely to perform better than the rest in the sector, said Masdekar.
In the past year, the pharma index is up 36.2% and healthcare index has gained 38%. On the Nifty healthcare index, which consists of drug manufacturers, hospitals and diagnostics companies, 11 out of 20 companies soared more than 30% in this period.
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