Top Pharma Stocks
The Indian stock market reserves an exclusive place for the pharmaceutical sector. Between the financial years 2009 and 2016, pharma stocks generated noteworthy returns of 30% CAGR (Compound Annual Growth Rate). Though the sector witnessed a few ups and downs between the years 2016 to 2020, the coronavirus pandemic revived them. This in turn, drew the attention of long-term investors.
Given the innovation, technological advances, and scientific breakthroughs, it is expected that pharma companies will grow exponentially in the future. Investors who are looking for fundamentally sound stocks with resilient balance sheets may consider pharma stocks.
However, among the varied choices available, it may seem murky to pick the best pharma stocks to buy in 2023. This post hopes to note an updated pharma stocks list containing the five best alternatives.
The 5 Best Indian Pharma Stocks to Consider in 2023
List of Pharma Stocks to Buy in 2023
| Name | Code (BSE) | Symbol (NSE) | CMP (as of Sep 2022) | Rating |
| Cipla | 500087 | CIPLA | 1035 | 1 |
| Sun Pharmaceutical Industries | 524715 | SUN PHARMA | 878.25 | 2 |
| Abbott India Limited | 500488 | ABBOTT INDIA | 17,905 | 3 |
| Dr Reddy’s Laboratories Limited | 500124 | DRREDDY | 4171.20 | 1 |
| Biocon | 532523 | BIOCON | 299.45 | 1 |
The 5 Best Indian Pharma Stocks - Quick Briefing
Now that you’ve noted the top players in the pharma stocks list, here are some quick details about them. It will help you discover them per you investment strategy in the list of pharma stocks:
With a strong presence in the chronic segment, Cipla has been a market leader in offering quality accessories and medicines for inhalation and respiratory therapies. With its disruptive progress in the domestic market, the company has started franchising in the US to launch complex generics.
During Covid-19, Cipla received approval for Albuterol to fulfil the shortage in respiratory products which sped up the organisation’s growth and margins in the US market. Furthermore, the company’s One-India strategy has shown decent performance and it is expected to grow substantially in the future.
Additionally, Cipla’s cost-cutting strategies are expected to improve its margin trajectory. Given these factors, investors may consider Cipla’s stock. However, they should also consider the risks associated, which include a broadening list of essential medicines, growth and profitability-related obstructions in South Africa, unfavourable regulatory actions, among other factors. These obstacles may impact Cipla’s domestic revenue, which may further pull down, the cost of its stock.
Sun Pharma stocks have had good profit-taking after retesting their record high. The company slipped below the trendline support of late. This, somehow indicates the continuation of the prevailing corrective phase. On November 2, 2022, Sun Pharma stock hit its 52-week high of Rs. 1,070.80 on the BSE. This movement kicked in after the organisation reported its September quarter numbers, which were better than expected.
The company announced a total of 11% rise in its consolidated net profit in Q2 FY23. It experienced approximately a 14% rise in its total revenue as of now. Given the significant gains, it's seemingly acceptable to invest in this stock. Moreover, the company features a competitive advantage of holding a specialty platform in the US with a robust product line including Absorica, Winlevi, and more.
The brand also features potential in organic opportunities because of its balance sheet. Most importantly, it has maintained a healthy EBITDA margin. However, while investing, investors should consider the stock’s volatility.
This India-based pharmaceutical business has a portfolio of nutrition products, medical devices, branded generic medicines, diagnostics, and more. The organisation offers solutions and products across different therapeutic domains including the central nervous system, women’s health, vaccines, consumer health, gastroenterology, multispeciality, and more.
Some of Abbott’s popular products include Digene (antacid), Zolfresh (insomnia), Librax (irritable bowel disease), Thyronorm (hypothyroidism), among others. In addition, it markets consumables under different brands like Pediasure, Ensure, Similac, among others. In December 2022, Abbott India reported revenue of Rs. 1,326 crores with a profit margin of Rs. 247 crore. As per FY22, the company’s net worth is Rs. 2,820 crore. Given the company’s past 10 years' financial track record and monetary performances, it seems rational to invest in Abbott India Ltd.
This Indian company focuses exclusively on core priority markets like China, the US, and Russia. Blending this focused approach with the existing non-core assets generated by its new leadership team, the company is continuing to experience boosted profitability. Dr Reddy’s Laboratories is about to launch new scale-ups in the US market which may also add to its profitable approach.
The company has an exclusive focus on cost control measures which is expected to improve its profit margins. To reduce its historical dependence on selected products, Dr Reddy’s Laboratories is trying to pick up its launch momentum. With skilful management abilities, the company has reported a big earning performance in recent quarters.
The risk with Dr Reddy’s laboratories' shares includes regulatory issues, foreign exchange fluctuations, delayed product launches, among other factors. However, given the company’s ROE (return on equity) of 13% over the last three years, it seems profitable to invest in their stocks.
This renowned biosimilar company is expected to bolster its biologic sales with its new scaling-up program with Trastuzumab and Peg-filgrastim. In addition, the company has planned for value unlocking by listing its new biosimilar division in the upcoming few years. The company strives to generate approximately Rs. 7,460 crore from its biosimilar segment this year. In addition, the company’s subsidiary, Biocon Biologics Limited has proposed to acquire Viatris’ biosimilar business for $3.3 billion to strengthen its existing vertical.
It is expected that the company’s global presence will be enhanced with its scientific expertise in manufacturing complex biosimilars. The commercialisation strength of its partner organisations may contribute to the company’s overall growth. However, there are a few risk triggers including higher-than-expected competition in the US market, adverse regulatory actions, high erosion or cap of market share, commercial uncertainties, and delayed launches.
Conclusion
Investing in pharma stocks may help investors earn big returns. However, before proceeding with the investments, it’s essential to check a few factors and zero in on the best pharma stocks. They may include the growing presence of medical infrastructure, off-patent pipelines, and the stock’s performance in the past few years. Investors should also take up detailed research about the management and profitability of the chosen stocks.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.