Pharma Stocks Drive Sensex Nifty Higher; Sun Pharma and Lupin To Watch

BSE Sensex is up approximately to a life-time high of 34,374.85 and the Nifty50 has reached 10,627.40 for the first time. The rally is a pre-budget cheer and optimism as well as due to the positive broader Asian market performance. Pharma sector is one the great performers in this bull run.

Pharma Sector Buzz

The Nifty Pharma index gained approximately 2.5 per cent to a two-month high. Sun Pharmaceutical Industries Ltd stock has risen 3.2 per cent, and was among the top gainers on the indexes. The other stock Lupin, has recently launched its generic product in the strengths of 250 mg and 500 mg after receiving approval from the US Food and Drug Administration (USFDA).

The stock market is moving despite the fact that India lowered its forecast for the current year’s economic growth to 6.5 per cent from the earlier projection of 7.5 per cent. This news has come before the federal budget to be released next month, as businesses were hit by the chaotic launch of new nationwide tax last July.

Health has become a part of the political agenda and is getting a lot of attention. The sector is expecting lot of things from the union budget 2018. On the Intellectual Property Rights (IPR) front, many bilateral trade agreements that countries are negotiating among themselves and with India, which could affect the local drugmakers. 

Sun Pharma

The US Food and Drug Administration is expected to inspect Sun Pharma’s manufacturing facility at Halol in the second week of February. This inspection is critical as the facility produces multiple medicines from tablets to ointments and injectables. This news let to the rise in stock price of the company today.

When fully operational, this Halol site had contributed approximately 15% of Sun Pharma’s US revenues. Sun Pharma’s facility in Dadra had a better record on manufacturing compliance. The site, after getting 11 observations in April 2017 as part of US FDA’s inspections, was cleared by the agency four months later in October, which brought relief from uncertainties.

Lupin Limited

Lupin is currently at INR 923 level.  Lupin has launched its Flucytosine capsules USP, 250 mg and 500 mg. Novel’s Flucytosine capsules USP, 250 mg and 500 mg are AB rated generic equivalent of Valeant Pharmaceuticals International Inc’s ANCOBON capsules, 250 mg and 500 mg. As per IMS MAT October 2017, Flucytosine capsules USP, 250 mg and 500 mg sales are of approximately USD 48 million in the US.

Moreover, the company is expected to clear all regulatory hurdles in the next 18 months to meet quality standards set by the Food and Drug Administration (FDA) of the US, and it could go beyond Rs 1,200 within 12 to 18 months.

Overall, Sun Pharma stock has already run up, but Lupin is at attractive price level, therefore the investors can take position or the existing investors can hold the stock.