Amid coronavirus pandemic, the pharma sector after underperforming for most of the year 2019 and then witnessing lows in March 2020 on global market rout, showed remarkable resilience. In fact the essential nature of pharma sector came to the fore and there was seen frantic buying of drugs that are chronic in nature such as Diabetes, cardiac, blood pressure etc. In fact from levels of 8060 on Nifty Pharma as on January 1, 2020, the levels on the sectoral index are at 12432 as at the close of December 15, 2020, marking an increase of 54 percent.
Then on repurposed Covid drugs such as Favipiravir, Remdesivir and HCQS resulted in increased revenues both in domestic as well as export markets. Also the pandemic led to buying of immunity boosting products and there was seen traction in domestic therapeutic from cardiac, diabetes and vitamins.
Pharma companies that witnessed sharp rebound in 2020 from March lows
1. Dr. Reddy's
5. Sun Pharma
API companies such as Laurus Labs and Divis Labs largely favoured by pricing factor gained the most
Then on as the non-Covid business spiked to 95% of pre-Covid level that got hit as its largely retail driven, there was seen a catch up rally in stocks such as Dr. Lal Path, Metropolis and Apollo Hospitals.
2021 Outlook for Pharma Sector
Now as the vaccine trials are under final stages by several firms in India and abroad, focus would now shift to vaccine production as well as its distribution. And given that companies that are seen to benefit most as per the views of Mr. Bhavesh Gandhi, Lead Analyst - Institutional Equities, YES SECURITIES are Dr Reddys', Aurobindo, Cadila and Wockardt and Serum Institute of India from the unlisted space.
Pharma Stock Picks By Yes Securities For 2021
As the Covid 19 vaccine related opportunity shall be one time in nature, significant weightage to the factor is not given when picking stocks for 2021:
1. Torrent Pharma on the rationale that it has fast growing brands in the domestic market.
2. Aurobindo and Alembic Pharma have been chosen as they can aptly play the US generics growth especially in injectables and sartans opportunity, respectively.