Shahina Mukadam, Independent Market Expert told CNBC-TV18, “This is the right time or maybe in the next six months it is a time to sort of accumulate pharmaceutical stocks for a three to five year period. I have myself done this, I have picked up something like an Aurobindo Pharma at declines, Glenmark Pharmaceutical, Fortis Healthcare I have been holding from much lower levels basically the reason being that this is a very bad period that the pharmaceutical sector is going through.”
She further added, “We are serious in terms of numbers across pharmaceutical companies, the results that they are declaring, we have seen the USFDA becomes very stringent and most of them have got certain negative – the USFDA has come on very seriously with negative observations for a lot of these companies and this has impacted both their US sales which is the mainstay for their profitability. So, this in my view is a time to start accumulating with three to five year view because I believe that the US market cannot do without Indian pharmaceutical generic companies.”
“The way they are structured, I believe after the phase of correction, there will be increased competition in terms of generic pricing pressure, over a period of time Indian pharmaceutical companies will be better placed and able to adapt. So I would be buying something like Aurobindo Pharma, Fortis Healthcare, I would also be looking at Lupin where there is some resolution coming about from the USFDA for a couple of their plants. So to that extent one can start accumulating but I don’t see any upward movement over the next six months because if you see on year-on-year (YoY) basis it is going to look optically very bad.”
“We are going to see lower margins, lower profitability and lower turnover, so to that extent one needs to be sure as to what one is doing when you are getting into these pharmaceutical companies as of now,” she said.