This chart shows claim settlement ratio of life insurance companies... Read On
MEMBER'S LOGINX
| Login Failure | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
- Home
- The 5 Minute WrapUp
- Chart Of The Day
- Expediting Drug Approval Process to be a Positive for Industry
Expediting Drug Approval Process to be a Positive for Industry
Jul 5, 2017
Speaking of valuations, the BSE Healthcare Index is down 16.5% in two years. This is a mighty fall compared to the benchmark index, which is up 11% during the same period. A downgrade in the earnings estimates has led to a selloff in the pharma space, which has led to a contraction in the price to earnings ratio (PE) of the pharma index.
The PE ratio of the Nifty Pharma Index for a five year period stands at 46 times. This ratio has contracted to 35 times currently. The headwinds being faced by this sector, have led to such lethal contraction.
USFDA alerts on Indian pharma companies have increased over the past few years. Regulators used to visit the plants every two years. Now they come every eight months. Increasing inspections has led to a total of 41 import alerts in the past eight years - 33 of them (80%) in just the last four years (2013-16). This clearly signifies increased USFDA scrutiny on Indian pharma firms. If that wasn't enough, increasing pricing pressure in the generics segment has dented realizations.
In this dull scenario, there appears to be some respite as the USFDA has expedited the drug approval process. Drug approvals for Indian companies have gone up 50% in the period from January to June 2017 compared to the same period last year.
While short-term pain is expected, companies with strong R&D capabilities and compliant plants (subscription required) will do well over the long term. The uncertainties make it important to be stock specific in the sector. It is important to look for companies that have the competence and staying power to overcome the challenges facing the sector.
In the latest issue of The India Letter (subscription required), we have identified a pharma stock which we believe will outlast others in the long run.
Data Source: Business Standard
This Chart Of The Day was published in The 5 Minute WrapUp - Would Buying Coke Along with Warren Buffett have been a Good Idea?
Our Most Popular Charts
This chart shows the top 5 countries in terms of improvement in HDI over past 2 decades... Read On
This chart shows the persistency rate of insurance policies.... Read On
-equitymaster.gif "The top 10 year multibagger stocks")
The chart shows the top 20 multibagger stocks over the past decade.... Read On
Market Indices are touching a record high. Time to tread cautiously.... Read On
OUR TOP 5 IDEAS
- Free Report: Multibagger Stock Ideas 2021
- Are You Making One of These 15 Costly Mistakes While Investing. Learn more!
- Covid-19 Proof Multibagger Stocks - Download this FREE Report Now
- Free Report: The Secret to Increasing Your Trading Profits Daily!
- No Guessing, No Hunches, and No Missed Trends Ever! Join Us on YouTube Now.
MARKET STATS
ABOUT EQUITYMASTER
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
FREE NEWSLETTERS
PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
- Basics of Value Investing
- Benjamin Graham
- How to Invest in Gold
- How to Invest in Silver
- Best Stocks to Buy Today
- Warren Buffett - The Value Investor
- The Best Small-cap Stocks to Buy
- The Best Bluechip Stocks to Buy
- Your Ultimate Guide to Penny Stock Investing
- 10 Rules for Successful Long-Term Investing
- How to Invest in the Share Market
- Momentum Moves
FOLLOW
APP
Copyright © Equitymaster Agora Research Private Limited.
Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap
Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster requests your view! Post a comment on "Expediting Drug Approval Process to be a Positive for Industry". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!