Big Boss USFDA hits pharma stocks harder

US Food and Drug Administration (USFDA) is haunting the Indian pharma companies for the past few months.

The performance of pharma companies on the Indian bourses is very much dependent on the USFDA inspections. The BSE Healthcare index has gained nearly 3 per cent on a YTD basis. The pharma companies are losing in terms of their market capitalisation after putting up poor performance on receiving USFDA notifications.

Divi’s Laboratories tumbled by nearly 20 per cent in Tuesday’s trading session after receiving import alert from the USFDA. The stock has lost 18 per cent on a YTD basis.

Similarly, Sun Pharma was trading under pressure after getting import alert from the USFDA in November 2016. The stock witnessed upward movement recently when the USFDA lifted the import alert.

The USFDA has cracked the whip on Indian pharma majors such as Cadila and Lupin in the past. Cadila Healthcare was under pressure a few months back as it had received established inspection report from the USFDA. Lupin Pharma recently recorded a surge as the USFDA gave clearance to its Goa plant.

The pharma stocks have witnessed high volatility on receiving notifications from the USFDA.

The primary objective of the USFDA is to protect and promote public health through supervision of medical drugs and foods sold in the US market.

As per the report by market experts, Indian pharmaceuticals market is the third largest in the world. The pharma market is expected to grow over 15 per cent per annum between 2015 and 2020.

The Indian pharmaceutical industry exports nearly 20 per cent of generic medicines to the global market.