Top 4 Pharmaceutical Stocks to Add to Your Watchlist

Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.

Do you remember when things were last year? Do you remember how the Covid-19 epidemic wreaked havoc around the world?

Now, thanks to omicron, we’re back, asking many of the same questions and feeling a heightened sense of dread about the future.

However, the pandemic or the new variant has not only brought together its problems but also various possibilities for the Indian pharmaceutical industry. Medicines are essential for life and the pharmaceutical industry has taken center stage.

Do you know that India is considered the “pharmacy of the world”?

According to available data, India is the world’s largest supplier of generic drugs. The Indian pharmaceutical sector supplies over 50% of the global demand for various vaccines, 40% of the generic demand in the US and 25% of all drugs in the UK.

Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.

On top of that, India exported 58.4 million doses of Covid vaccine to 70 countries in March 2021.

With a skilled, low-cost workforce and a well-established manufacturing base, India is poised to play an even greater role in global drug safety. India will remain one of the world’s most popular pharmaceutical markets for years to come.

Many pharmaceutical stocks, especially those dealing with the Omicron variant, have recently garnered investor interest, causing stock prices to skyrocket.

With the help of Equitymaster’s powerful equity filter, we have selected the best listed pharmaceutical companies to research.

These are the stocks that came to light when we performed the analysis of the leading pharmaceutical companies in India.

1. Aarti drugs

Aarti Drugs was established in 1984 and is part of the $ 900 million Aarti Industry Group with a robust research and development (R&D) division in Tarapur, Maharashtra Industrial Development Corporation (MIDC).

The company is engaged in the manufacture and sale of active pharmaceutical ingredients (APIs), pharmaceutical intermediates, specialty chemicals as well as formulations.

It is also one of the world’s largest producers of metformin, fluoroquinolones, tinidazole, metronidazole benzoate, ketoconazole and nimesulide.

The company exports its products to more than 100 countries in Europe, Australia, Africa, Asia, Latin and North America.

Aarti Drugs recorded stable revenues on a year-over-year and sequential basis, while margins remained under pressure in the September 2022 quarter.

The company’s after-tax profit (PAT) was down 43.4% year-over-year (YoY).

Continued rise in commodity prices, supply chain disruption due to unexpected power outages in China, sudden surge in coal prices, high transportation costs due to shortage of shipping containers and expense single staff, linked to salary review, everything impacted margins.

However, the company has seen good profit growth of 32.5% compound annual growth rate (CAGR) over the past 5 years.

In the past year, the stock is down 26.7%. Over the past 30 days, Aarti Drugs share is trading up 3.5%.

2. JB chemicals

JB Chemicals & Pharmaceuticals (JBC), established in 1976, is one of the fastest growing pharmaceutical companies in India. It is a leading player in the hypertension segment.

The company is also engaged in the manufacture and marketing of a diverse line of pharmaceutical formulations, herbal remedies and APIs.

Its strong presence in India represents the majority of its turnover. Its other two main markets are Russia and South Africa.

In India, JB Chemicals owns five brands among the country’s top 300 brands. The company exports its finished formulations to more than 30 countries, including the United States.

In addition to supplying branded generic formulations in several countries, it is also a leader in the manufacture of medicated lozenges. The company ranks among the world’s top 5 manufacturers of medicinal and herbal lozenges.

Lozenges to suck around the world are a well-accepted treatment option. But, in India, it is still at an early stage. Maybe it’s because there are very few players in this space. The ecosystem in India has yet to be built and most of the lozenges are OTC products.

The prescription lozenge market in India is estimated at around Rs 150 crore. The company expects its new treatment options to expand the market.

In the September 2022 quarter, the company announced a 32.4% increase in consolidated net profit thanks to strong operational performance in India and internationally despite pandemic issues and chain uncertainties. supply.

The company derives 47% of its revenues from its domestic activities and 53% of its revenues from its international activities.

In a report, the company said,

Over the past year, several initiatives, including the realigned Go-To-Market model, diversification into complementary therapies and new launches, have helped the company maintain its growth momentum in India, leading to share gains in market and improved ranking.

Shares of JB Chemicals & Pharmaceuticals have climbed 63% in the past year. The counter is up 2.1% over the past 30 days.

3. Aurobindo Pharma

Aurobindo Pharma is an Indian pharmaceutical manufacturing company headquartered in HITEC City, Hyderabad, India.

The company started its activities in 1988-89 with a single semi-synthetic penicillin manufacturing unit in Pondicherry.

It is also present in six major therapeutic areas: antibiotics, antiretrovirals, cardiovascular products, central nervous system, gastroenterology and anti-allergic.

The company markets its products in more than 150 countries. Its marketing partners include AstraZeneca and Pfizer.

Aurobindo Pharma’s consolidated profit fell 2.1% to Rs 700 crore in the second quarter ended September 30, 2021 against Rs 700 crore in the same quarter of the previous fiscal year.

Profitability was affected by cost pressure on some of the key raw materials as well as higher logistics costs.

However, the majority of segments performed well, supported by a modest increase in demand and increases in market share.

Its R&D expenses amounted to Rs 400 crore, or 6.7% of revenue in the quarter.

The company has aggressive plans to expand its injectables business. It aims to reach $ 650-700 million in global injectable revenue by fiscal 2025.

Over the past three months, the company’s share price has traded down 2%.

4. IPCA Laboratories

IPCA Laboratories is an Indian multinational pharmaceutical company based in Mumbai.

It produces Theo bromine, acetylthiophene and P-Bromo Toluene as API. IPCA sells these APIs and their intermediaries around the world. It produces over 150 formulations, including oral fluids, tablets, dry powders and capsules.

IPCA announced a 6.3% drop in its consolidated net profit to Rs 250 crore for the second quarter ended September 30. It said sales of Rs 1,530 crore in the quarter ended September, up 14% year-on-year.

Over the past 5 years, the company’s turnover has grown at an annual rate of 13.6%. Its market share increased from 1.6% to 2.1% over the same period.

Last month, in November, IPCA Laboratories acquired a 26.57% stake in Lyka Labs for Rs 978.9 million. IPCA management sees the formulations segment as one of the main growth drivers, with the domestic market taking the lion’s share. This acquisition will also contribute to management’s aspirations to join a new global market for new product lines, allowing better market access.

IPCA has lined up ambitious capital spending of around Rs 400 crore over the next 3-4 years. The company adds a new factory in Dewas to increase its production of APIs. It should be commissioned by the first quarter of next fiscal year and would increase capacity by 25%.

Over the past 30 days, the IPCA share price has fallen 1.7%. Over the past year it is down 6.2%.

For more details, see the analysis of the 2020-21 annual report of IPCA laboratories.

Overview of major pharmaceutical stocks in India from Equitymaster’s stock filter

Here is a brief overview of these companies based on some crucial financial data.


Photo credit: Bloomberg

These parameters can be modified according to your selection criteria. This will help you identify and eliminate stocks that do not meet your criteria. It will also focus on stocks meeting these measures.

To conclude …

Over the past year, the Indian pharmaceutical industry has played a crucial role in the development of diagnostic tests and the manufacture of drugs for the treatment of Covid-19.

The pandemic could also prove to be a blessing in disguise for pharmaceutical companies, as it has caused them to focus more on various pharmaceutical segments.

In addition, the efforts of pharmaceutical companies have been complemented by the government’s Production Incentive Program (PLI).

The Pharmaceuticals Department has launched a PLI program to promote domestic manufacturing by establishing entirely new factories with a cumulative expenditure of Rs 6,940 crore from FY2021 to FY2030.

As the third largest pharmaceutical producer in the world, India has received global attention with expectations to meet global demand.

However, for a brighter future, pharmaceutical companies will need to seize the right opportunities and spend as much as possible on manufacturing facilities and R&D.

Identifying fundamentally sound pharmaceutical stocks is both an art and a science and a big numbers game.

Always try to put money into a strong pharmaceutical company with a long history of successful operations. If there is not enough confidence in the stock, in the market, it could drop before the market realizes its true potential.

Good investment!

Warning: This article is for informational purposes only. This is not a stock market recommendation and should not be treated as such.

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