The Hindu Business Line : Bio-tech counters in limelight

THE pharma industry has always been the more visible cousin, but the bio-tech segment is soon catching up as the "best bet" in an otherwise volatile market.

This was evident from stocks such as Biocon, Jupiter Biosciences and Panacea Biotec, which witnessed investment-based buying on Tuesday.

Brokers said that the immediate trigger for the upsurge in these counters was talk that benefits provided to the software sector is likely to be extended to the bio-tech sector. Biocon, in particular witnessed broad-based institutional buying. The buzz on the street was that a domestic brokerage and couple of foreign broking houses have come out with a buy call on the stock with a price target of Rs 1,000.

Analysts were unclear as to the impact or the extent of what these benefits would mean for this sector. However, those tracking the sector see biotech sector registering a manifold growth by 2007. "The Indian biotech industry, which accounts for a mere 2 per cent of the global biotech market, expects to scale the 10 per cent mark in five years," said a source. There are also expectations that the sector could, going forward, see some streamlining.

"Duplicity of norms is one hurdle that the domestic biotech sector would be looking to scale under the new Government.

The biotech sector comes under the purview of the Ministries of Health, Environment, Agriculture and Commerce," pointed out an analyst. An Ernst &Young report has said that India is expected to generate $5 billion in revenues besides creating one million bio-tech jobs in five years.

When asked to comment on the possibility of certain benefits being extended to this sector, Mr Rajesh Jain, Joint Managing Director of Panacea Biotec, said that a robust regulatory framework is what the bio-tech industry seeks. "We are not looking for any short-cuts or relaxation. The industry is asking for a pro-active and integrated system that clears proposals in a time-bound manner, keeping in mind the health of the nation," he pointed out.

However, a section of the market is of the view that select stocks in the sector, in particular Biocon, have run up too sharply. "There is a lot of hype in this sector. As such one should exercise caution," sources said.

According to Mr Dilip Bhat, Director (Research), Prabhudas Liladher, one needs more clarity on the valuations front before taking a call on the sector.

"There is very little clarity on the predictability of revenue flow etc. As such it would be better to adopt a wait-n-watch attitude," he said.

The stock of Biocon ended at Rs 492.85, up 2.44 per cent with around 5.05 lakh shares traded on the BSE. On the NSE, the stock ended at Rs 492.65, up 2.36 per cent with around 11.49 lakh shares traded.

]Panacea Biotec ended at Rs 47.30, up 0.21 per cent with around 64,245 shares traded on the BSE.

Jupiter Biosciences closed at Rs 83.10 (BSE), up 5.59 per cent with around 1.87 lakh shares traded.

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