• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Deeptha Rajkumar

EVEN as it seemed that pharma stocks would see some consolidation, it received a shot in the arm on the bourses on Thursday on reports that international pharma companies need to outsource from India to reduce expenses.

However, after the initial run up, most of the frontline pharma stocks came off their highs due to squaring up of positions in the F&O segment. Rumours that the ORG-Marg growth numbers on pharma were out, was another reason behind some of the run-up in the stocks. As per the market grapevine, the McKinsey report states that large international pharma companies could be looking at paring their new drug development costs by as much as $200 million if they chose to outsource development work to India. The perception was given the global competition and the cost involved in R&D, India offers cheap alternative for outsourcing development work.

However, analysts are of the view that the outsourcing story is a long term one. "While some of the small companies are already benefiting from this, for others, factors such as to what extent it translates into actual revenues and regulatory approvals are still to play out,'' sources said.

Yet given the earnings visibility plus the outsourcing story, brokers said the undertone looked bullish.

A section of the market is also of the view that the pharma sector has outperformed the market. While not exactly quoting at a premium they are not undervalued either.

Amongst pharma stocks, Ranbaxy in particular witnessed a lot of interest following a buy report on its stock by foreign brokerage, Credit Layonnaise. The stock ended at Rs 953 on the BSE and Rs 949.25 on the NSE.

Divi's Laboratories hit a 52-week high and ended the day at Rs 883, up 10 per cent on BSE and Rs 883.30, up 10 per cent on the NSE. According to market talk, foreign broking house DSP Merrill was a buyer at this counter.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Volatile movement

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line