Pharma Sector: Resilient Amid Market Weakness

I have a significant investment in the pharma sector, but I am uncertain about what to do amid the ongoing market weakness. Should I stay invested or exit? - Ankush Jha

Editor Responds: Despite ongoing market weakness, there’s no need for concern regarding the pharmaceutical sector, which has demonstrated resilience in uncertain times. Nearly 65 per cent of pharma companies that have reported results so far posted positive net profit growth. On an aggregate basis, the sector achieved 9 per cent year-on-year revenue growth, with net profit soaring by an impressive 24 per cent. This robust performance has been driven by strong demand in regulated markets and easing pricing pressure in the U.S.

Additionally, lower raw material costs have supported margin expansion for formulation players. The U.S., which accounts for 30 per cent of Indian pharma sales and holds a 40 per cent volume market share, remains a pivotal market. The potential return of Trump’s China Plus One strategy could open new opportunities for Indian pharma players to bridge the supply gap in the U.S. generic drug market. Given these factors, staying invested in the pharma sector appears beneficial for the long term. However, investors should prioritise fundamentally strong companies.