World economy in a tizzy, but Indian pharma flying high

Monday, May 13, 2013

Although global economic recovery still remains fragile and the road back to normalcy is a long and difficult one, the fortunes of India’s pharmaceutical industry remain upbeat. Whereas the financial year gone by has been a dismal one for companies in most sectors, domestic pharmaceutical companies have not only bucked the trend but have seen huge growth in their market capitalisation. In 2012-13, the BSE Healthcare Index returned 21 per cent compared to the modest 8 per cent rise in the Sensex, and the stocks of 6 of the top 10 pharmaceutical companies (by market cap) outperformed the broader index.

This strong performance was underpinned by an amalgam of strong exports to the U.S. and the depreciation of the rupee against the dollar. In fact, the growth story of the industry is a more long-term phenomenon; it has grown consistently at a compounded annual growth rate (CAGR) in excess of 15 per cent over the last five years. This robust growth not only indicates the industry’s inherent strengths in the global landscape, but is also a reflection of improving healthcare standards in the country. The constant demand for reduction in manufacturing costs globally has presented Indian companies with ample growth opportunities, specifically in developed markets.

Source: The Hindu (link opens in a new window)

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