The Indian equity markets continued to trade in green during the last two hours of trade on the back of sustained buying across the board. All the sectoral indices are trading in the green barring auto and healthcare.
Most of the Pharma stocks are trading mixed with Aurobindo and JB Chemicals being among the top gainers and Lupin and Cipla among the losers. As per the financial daily, government is in the process to permit three more drugs under compulsory licensing. The three drugs in issue viz Trastuzumab, Ixabepilone and Dasatinib are indicated for cancer treatment and belong to innovators like Roche and BMS. The government has appointed a panel to work on the issue and decide whether the said drugs can be marketed under the compulsory licensing provisions by the companies. As per sources, the health ministry has sent proposal regarding compulsory licensing for the three drugs to the concerned authorities. Natco was the first Indian company to get compulsory license for manufacturing of Bayer's version of Nexavar, on the grounds of affordibility in price. The price difference between the generic and innovator's drug was as much as 32 times Natco's drug price. Compulsory licensing is a provision under the WTO that allows a government to permit a company to manufacture a patented drug without the consent of the innovator company.
Most of the auto stocks are trading in red with Maruti Suzuki and Bajaj Auto being the major losers. As per a financial daily, Maruti Suzuki is increasingly betting on sales of diesel vehicles to spruce up its profitability. The company expects the overall share of diesel vehicles to rise to 43% by 2015 from the current share of 38%. The company is investing Rs 17 bn in setting up diesel engine manufacturing capacities of three lakh units per annum. While half of the planned capacity is expected to be commissioned in 2013, the remaining is likely to go on-stream in 2015. According to the company, sluggish demand for petrol cars had necessitated higher discounts. The average discounts escalated to an all-time high of Rs 14,750 during the Q2FY13 which was around 30-40% higher than the discounts normally offered. This has led to a 100 basis points cut in the company's profit margins. Since discounts are being offered only on petrol vehicles, the change in the product-mix towards diesel vehicles is likely to improve profitability. The company has also increased the sales of Alto car on which no discounts are being given.