COVID 19 has increased the use of digital technologies which turned out well for the IT sector. If we talk about the pharma sector, there has been a much increase in the pharma stocks as investors focus shifted to COVID 19 related opportunities.
Till December 2020, many things have changed as many SMEs faced a huge decline in their growth. Also, top-notch companies have gone through crises that can’t be ignored.
In such a deeply problematic situation, one thing that performs exceptionally well during a financial and economic crisis in Indian Stock Markets.
The Nifty 50 index has experienced a remarkable recovery from its all-time lows in March. At the beginning of January 2021, the index had risen to 14%.
If you look at the top ten stocks that have generated outstanding stock market trading returns in 2020, it's none other than IT and Pharma companies that have emerged as the largest stocks.
In 2021, stocks of pharma companies remain on the top yet best-performing sectors in the Indian stock market.
In addition to this, the importance of pharma companies has been rising continuously as the demand for medicines, immunity boosters, and life-saving drugs take superiority to save lives.
Further, as the news of the third wave of COVID has come out, the people of India again keep their eyes on the pharma sector to save the country from the upcoming disaster.
Few companies have benefited from the vaccination drive.
1. Cadila Healthcare (Zydus Cadila)
Cadila Healthcare, popularly known as Zydus Cadila, is a leading pharmaceutical company headquartered in Ahmedabad.
India primarily engaged in the manufacture of generic drugs and the company is ranked 100th in the Fortune India 500 list in 2020.
Cadila Healthcare has produced the first vaccine called ZyCoV-D, built on a DNA platform.
Also, it has received a EUA (Emergency Use Authorization) from regulators. As per the sources, ZyCoV-D is considered India’s second home-grown vaccine post-Covaxin. The vaccine has come in 3 doses with a success rate of 66.6%.
In the June quarter of 2021, Cadila Healthcare witnessed a rise of 29.3% net profit Year on Year. Also, the huge demand for the vaccines made outstanding sales in the Indian market as it has witnessed a revenue increase of 14.5% year on year.
2. Cipla
Introduction:
Cipla Limited is an Indian multinational pharmaceutical company, known for manufacturing medicines to treat depression, respiratory diseases, cardiovascular diseases, arthritis, weight control and other medicinal conditions.
Furthermore, the Drugs Controller General of India has given a go-ahead signal to import India’s Moderna’s Covid 19 vaccine.
The success rate of Moderna’s vaccine is 94.1%. It will be imported in ready to use form. As per the prescription, the vaccine can be stored for seven months, however, if a vial is opened, it can be used for a maximum of 30 days.
As of June 2021, Cipla witnessed a sharp rise of 24% in net profits Year on Year. Furthermore, the revenue also saw a massive increase of 27% year on year. The figures for profit have clearly shown that the Cipla has benefitted from the impact of the second wave of Covid-19.
3. Dr Reddy’s Laboratories
Introduction:
Dr Reddy’s Laboratories is an Indian multinational pharmaceutical company. Headquartered in Hyderabad, the company is committed to providing affordable and innovative medicines for normal people.
Dr Reddy’s Laboratories entered into a partnership with the Russian Direct Investment Fund and produced a vaccine called Sputnik V. According to sources, the vaccine has marked a success rate of 91.6%.
From September 2021 onwards, the company is likely to begin the production of this vaccine. However, the company saw a slight decline in operating profits in June 2021. Profits declined 13% year on year as there was a marginal slump in the profits of Rs 5.7 billion.
4. Panacea Biotec
Introduction:
Panacea Biotec is a pharmaceutical company and vaccine maker company registered in India. With principal offices in Delhi, Mumbai, the company got listed in 1995 as Panacea Biotec.
The company has tied with Dr Reddy’s Laboratories, Human Vaccine and Generium to produce nearly 25 million doses of Sputnik V. In other words, it acts as an intermediary between Generium and Dr Reddy’s Laboratories.
Panacea purchases the products from the company Generium prepares vaccines and distributes them to Dr Reddy for the overall supply within the country.
Even though the company manufactures vaccines, it also suffers from losses. In June 2021, the net loss observed for Panacea is $ 574 Million. Unfortunately, the revenue is still flat for the company.
5. Wockhardt
Introduction:
Wockhardt Limited is a pharmaceutical and biotechnology company that manufactures biopharmaceuticals, nutrition products, formulations, active pharmaceutical ingredients and more.
Headquartered in Mumbai, the company has manufacturing plants in India, UK, Ireland, France, the US, Ireland and France.
Besides panacea, Wockhardt is the next company that is responsible for the supply of Sputnik V and Sputnik Light vaccines. The deal had taken place among three companies: i.e. Wockhardt, Enso Healthcare and Human Vaccine LLC.
Human Vaccine LLC is a subsidiary of the Russian Direct Investment Fund. Wockhardt is likely to supply nearly 600 million doses of vaccine Sputnik V and Sputnik Light Vaccines.
In the June 2021 quarter, the company received 3 patents and currently holds 766 patents. However, the company also faced a huge loss of Rs 65.8 billion for the first quarter.
Takeaway
The pharma stocks stated above are likely to benefit from the vaccination drives. Hence, it is essential to figure out how much time is left for the vaccination approval. Some companies already have their vaccines out in the market, while few just started their manufacturer setup.
Also, check out the companies that have completed all the clearances required by the regulators. Select those companies’ stocks whose products are being prepared or ready to release in the future. It will be a more profitable long-term plan.
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