HomeMarket NewsStocks NewsNot a bad idea to remain overweight on pharmaceutical, says Nirmal Bang Institutional Equities

Not a bad idea to remain overweight on pharmaceutical, says Nirmal Bang Institutional Equities

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By Ekta Batra   | Prashant Nair  June 15, 2018, 2:46:45 PM IST (Published)

It is not a bad idea to remain overweight on pharmaceutical because the drug prices had come down to very abysmally low levels, said Rahul Arora, CEO, Nirmal Bang Institutional Equities.


In some cases, on some products they were actually very close to the Jan Aushadhi prices, he said.

Speaking about the pharmaceutical sector, Arora said, “The damage has been so much in terms of price erosion, and I do not mean in terms of the product price erosion, but I mean in terms of the stock price erosion as well because one references the other."

"However, I think with good news flow coming through on Sun Pharmaceutical, Dr Reddys over the last couple of days, they were quite hopeful on the launches. So I think the entire sector was coming to you anywhere between 12-15 times FY20 earnings because people had built in a lot of the launches coming through in the second half of 2019-2020,” he added.

“We are still believers in Dr Reddys. Even with the approvals, my analysts believe that the other players in the fray will probably not launch. We are expecting incremental earnings of $80 million for Dr Reddys this year. Aurobindo Pharma is another interesting one that we like. If you see the number of drugs that are going off patent for Sandoz and the overlap it has, Aurobindo is quite substantial,” he added.

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