Pharma shares in focus: Cipla, Aurobindo Pharma hit 52-week high

Dr Reddy's, Divis Labs, Biocon, JB Chemicals, Caplin Point Lab, Aarti Drugs, Indoco Remedies, RPG Lifesciences and Glenmark Pharma were up in the range of 3% to 5%.

Shares of pharmaceutical companies were in focus on Friday with Nifty Phamra index gaining 2 per cent in an otherwise range-bound market on expectation of strong demand scenario from both domestic and export market.

At 01:37 pm, Nifty Pharma index was up 2.1 per cent at 9,664 points, as compared to 0.15 per cent decline in the benchmark Nifty50 index. The pharma index hit an intra-day high of 9,677, which is 1 per cent short of its 52-week high of 9,753.50 touched on April 27, 2020.

Among individual stocks, Dr Reddy’s Laboratories, Aurobindo Pharma, Divis Laboratories, Biocon, JB Chemicals & Pharmaceuticals, Caplin Point Laboratories, Aarti Drugs, Indoco Remedies, RPG Lifesciences and Glenmark Pharmaceuticals were up in the range of 3 per cent to 5 per cent on the National Stock Exchange (NSE).

Among key gainers, Cipla hit a 52-week high of Rs 651, up 4 per cent in the intra-day trade. The stock has surged 60 per cent in the past three months. The stock has been under investor radar as the company’s respiratory product pipeline for US Generics has been shaping up well.

"This provides growth visibility over the next two to three years. Also, efforts to improve synergies across the prescription, trade generics, and consumer portfolios for the India business have started to yield results," analysts at Motilal Oswal Financial Services said in result update.

Cipla is among the three Indian companies that have signed a non-exclusive licensing agreement with US-based Gilead Sciences to make and distribute the latter’s repurposed Ebola drug Remdesivir in 127 countries, including India.

According to a Business Standard report, Cipla is working on different therapies for the novel coronavirus, including its newly licensed Remdesivir, the anti-HIV drug combination (Lopinavir and Ritonavir) as well as the biologic drug Tociluzumab from Roche, which it exclusively sells in India.

That apart, Aurobindo Pharma, too, hit a 52-week high of Rs 742, up 4 per cent in the intra-day trade today. The stock has soared 46 per cent in the past three months, as against a 16 per cent decline in the S&P BSE Sensex. The company is schedule to announce its January-March quarter (Q4FY20) earnings on Wednesday, June 3, 2020.

Analysts at BOBCAPS expect stable US sales for the March quarter at US$ 415 million, supported by volume gains in baseline products such as Rosuvastatin, Aripiprazole and Pantoprazole. The company has roughly three months of inventory plus all its plants are operating at normalised levels (only a few are 5-10 per cent below-normal), which should sufficient to drive growth in near-/mid-term quarters, it added.

“Aurobindo’s US business is being driven by new approvals from a large pending pipeline coupled with a diversified product portfolio. With Sandoz deal called off, debt concerns have receded and earnings growth can sustain in high single digit over FY20-22,” analysts at YES Securities said.