Investors rushed to buy pharma stocks as the Indian government will open up vaccination to anyone over 18 years of age starting May 1 with greater flexibility on pricing, procurement and administration of vaccines. This opens up the private market for vaccination and provides more leeway to states and private companies.
"Better realisation in the private market along with reports of funding from the government for capacity expansion (Rs 3,000 crore/Rs 1,500 crore credit line for Serum Institute/Bharat Biotech) could have potential to spur vaccine production at a time when demand may spike with this eligibility relaxation," analysts at CLSA said in healthcare sector outlook report dated April 20.
For those at Axis Capital, the sudden spurt in Covid-related drugs will benefit players like Cipla, Dr Reddy’s, and Cadila who are scaling up capacity and production to meet the sudden rise in demand.
"The government measures to control the spread include approval of vaccines (which are still under trials) for emergency use – earlier Covaxin and now Sputnik-V by DRL/RDIF; ZyCovd by Cadila (in phase 3) expected by May. However, government procurement (at USD 2 per dose) and distribution is making it unviable for players to scale up production, given high costs/ investments in facilities, transportation and storage," the brokerage firm said. However, it expects 8-10 per cent growth for Indian Pharma Market (IPM) in FY22 (on lower FY21 base), but if Covid situation persists we could see a muted trend – similar to FY21.
At 01:50 pm, the S&P BSE Healthcare index (up 2 per cent at 23,570) and Nifty Pharma
index (2 per cent at 13,522) were outperforming the benchmark indices, S&P BSE Sensex and Nifty50, which were up 0.16 per cent each. RPG Lifesciences, Vivimed Labs, Morepen Laboratories, Nectar Lifesciences, Wockhardt and Panacea Biotech were up in the range of 10 per cent to 20 per cent.
Vivimed Labs was locked in the 20 per cent upper circuit band at Rs 28.40, having soared 66 per cent in the past three days, after the company announced that it has received approvals for 3 products from its manufacturing site in Hyderabad, which is PICS & Health Canada approved site. The company has received approval for Bilastine tablets 20mg under brand name ‘FLUSTIN’, Ornidazole and Otloxacin tablets under brand name ‘ORZOLE COMBI’ and Paracetamol 125mg/5ml and Chlorpheniramine Maleate Syrup 2mg/5ml 100ml under brand name ‘FEBRIL’.
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