Taking Stock of the Country's Pharma Sector
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STATSGURU: Taking stock of the country’s pharma sector THE INDIAN pharma sector has been shaken up by the than domestic firms. Meanwhile, pharma exports have grown large, most companies that are doing well have similar price-earnings sale of Ranbaxy Laboratories to Sun Pharmaceutical steadily over the past few years, as Table 2 shows. multiples, above 20, as demonstrated by Table 4. And the BSE’s pharma Industries by Ranbaxy’s erstwhile Japanese owners, What is also worth noting is that, for some companies like Sun index has shown a steady increase, clearly visible in Table 5 – at less Daiichi Sankyo. Pharma and Wockhardt, earnings from abroad have come to occupy a volatility than the Sensex. However, as Table 6 shows, several companies The sector, overall, has posted reasonable operating profits, as much larger segment of revenue than they did earlier, as Table 3 shows. — such as Ranbaxy, of course, as also Jubilant and Cadila — had periods Table 1 shows – but multinationals have seen much greater volatility How is the market reacting to changes in the pharma sector? By and last year in which their stock prices were under severe stress. 1: MNC FIRMS SAW MORE VOLATILITY THAN INDIAN ONES... 2: ...WHILE EXPORTS GREW IN THE PAST FEW YEARS Operating profit margin (% of net sales) Value of pharma exports* ($ mn) Source: Capitaline * Drugs,pharmaceuticals and fine chemicals Source: DGCIS, Kolkata 3: FOR SOME FIRMS, EARNINGS FROM ABROAD NOW MAKE UP A CHUNK OF THEIR REVENUE 4: MOST FIRMS DOING WELL HAVE SIMILAR P-Es Revenue earnings in forex (as % of total revenue) Price-to-earnings multiples (X) BSE Sun Pharma Lupin Cadila Cipla Glenmark Aurobindo Dr Reddy’s Wockhardt Ranbaxy Jubilant Healthcare Inds Health Pharma Pharma Labs Labs Life *According to standalone data Source: Capitaline Base on TTM EPS as on April 10, 2014 Source: Capitaline 5:BSE’S PHARMA INDEX HAS SHOWN A STEADY RISE 6: STOCKS OF SOME FIRMS HAVE SEEN AN UPTICK, WHILE OTHERS HAVE COME UNDER SEVERE STRESS, IN THE PAST YEAR BSE Heatlthcare vs Sensex Share price on BSE (in ~) Ranbaxy Laboratories Dr. Reddy’s Laboratories Sun Pharmaceutical Industries Lupin Cipla Cadila Healthcare Aurobindo Pharma Wockhardt Jubilant Life Sciences Glenmark Pharmaceuticals Source: Bloomberg Source: BSE StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines Compiled by BS Research Bureau.