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Is the Worst Over for all the Pharma Stocks?
Jun 5, 2017


Markets are in a punishing mood towards export-oriented sectors right now. Most of these sectors seem to be facing some headwinds. It looks like their growth story has come off the rails. They seem to be Megatrends in reverse. Take the case of pharmaceuticals sector in India.

Now, wearing the questioning hat we borrowed from our Mexican fisherman story. Girish, our pharma analyst dug deeper. We wrote about some of his views on pharma sector in general in our recent edition of Research Digest (subscription required).

    There's price control regulations in many countries to worry about. There's the well-documented USFDA issues. Then there's something you've probably not heard about yet...

    Did you know pharmacies in the US are consolidating? That is, they're getting bigger through mergers and acquisitions? This has resulted in greater bargaining power when buying drugs from pharma firms.

    The list of pharma sector woes is long. Is there light at the end of the tunnel? Girish thinks there is.

    It doesn't make sense to paint all pharma stocks with the same brush. The leaders of the industry will certainly survive this phase. And just like IT, there are interesting, niche pharma stocks that are worth your attention.

His deduction was markets are irrationally punishing everyone. Such gloom and doom scenarios are bound to create opportunities in select stocks. The prudent thing to do is to remain focused and patient for both opportunities to come as well as to play out completely.

Data Source: Ace Equity

This Chart Of The Day was published in The 5 Minute WrapUp - A Parable for Today's Heady Markets

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