In Pharma Stocks you must always have basket

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by Srouta Mukherjee, Jan 15, 2016.

  1. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    In Pharma stocks you must always have basket because of huge FDA risk. Marksans is down 32% in two days, Wockhardt is down 11% Granules is down. So NEVER PUT EGGS In One stock. Have at least three Pharma stocks in portfolio with max allocation of 20% to entire sector and max allocation of 5% to one stock. I have Ajanta, JB, Shilpa, Indoco, Granules in portfolio so I can sound sleep :)
     
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  2. Fun_Da_Mentalist

    Fun_Da_Mentalist Active Member

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    We can argue about how many stocks are needed for diversification but yes, a minimum of diversification is fundamental.
     
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  3. Warrenbuff77

    Warrenbuff77 Member

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  4. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    But is it opportunity to buy? SC may strike down NGT order. I am doing SIP still.
     
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  5. Warrenbuff77

    Warrenbuff77 Member

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    "But is it opportunity to buy? SC may strike down NGT order. I am doing SIP still."

    Yeah, lets us hope for the best. But in long term Journey JB chem is a good pick, By 2016 end, if everything goes good, it can clock rs 500+. I read a research report in MMB.

    @ Srouta: i have granules. Will add more now.
     
  6. kharb

    kharb Well-Known Member

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    Pharma is a very innovative and R&D based industry which requires world class manufacturing facilities and work practices.So small cap or mid cap may carry much more risk than large cap in other sectors.More over general public patients also want to go for established brands of drugs for safety reasons. It is better to go either for good large cap basket and if still we want to play small or mid cap, our research and first hand information about the company must be almost perfect.I am invested in Lupin and now slowly in Sun.I had just taken very very very small and insignificant token entry in Granules after lot of noise for this stock in media for just tracking purpose only and testing waters. But as I am an extra cautious (more than required) person, did not moved forward an inch after that .More over in my view Pharma should not go beyond 15% of your portfolio with two large caps or maximum three stocks with only one big mid cap.
     
    Last edited: Jan 16, 2016
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  7. San8422

    San8422 Active Member

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    I think there must be 2 types of pharma shares in our portfolio: -

    1. Those which cater to Indian market and hence are not affected by FDA.

    2. Those which cater to US markets and hence are affected by US FDA.
     
  8. dineshkapoor27

    dineshkapoor27 Active Member

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    @San8422 there isn't much left after these choices :). I like Alkem labs. They have bigger exposure to Indian markets and I feel is a bit more reasonable in their valuations.
     
  9. Parin Gala

    Parin Gala A long term investor

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    All pharma companies pounded mercilessly today without any regards to their quality. I guess another round of such pounding may be a good opportunity to start nibbling into the better quality pharma names for long term investment.
    Better to have a bouquet of stocks rather than a couple of them. Since the USFDA is quite liberal in giving warnings these days. Also, since these companies are research oriented there may be a company specific slowdown or threat.
    My personal favourites to pick up on dips are

    Granules India ltd.
    Shilpa Medicare
    Aarti Drugs
    Suven Lifesciences
    Natco Pharma
    Strides Shasun
    Glenmark
    Biocon
    Cadila healthcare
    And Torrent Pharma.

    A well balanced bouquet in the pharma space can give you good protection against any possible company specific threat and also compound your money efficiently.
     
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  10. kharb

    kharb Well-Known Member

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    From posts from many members,it seems it is better to go to Pharma mutual fund,where fund manager keep basket and keep watch on FDA issues.?????
     
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  11. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    This is best solution because then we can blame manager for soup.
     
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  12. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    JB Chem is in this but it got into NGT soup. Also if Pharma stocks falls all follow because of valuations reasons.
     
  13. Fun_Da_Mentalist

    Fun_Da_Mentalist Active Member

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    ...but the money is still yours:)
     
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  14. Yusef

    Yusef New Member

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    what is your view on Cipla for long term? I buy in SIP for past 12 months, and also planning to JB chem and Suven Lifesciences
     
  15. San8422

    San8422 Active Member

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    Sectoral mutual fund is a bad idea. We usually do not track MF as much as we track stocks although our investment in MF may be more than those in stocks. So if sector goes down then we may not notice it as quickly as we do when we stocks go down. Also number of companies getting US FDA notice is quite large. So better avoid such sectoral MF.
     
  16. San8422

    San8422 Active Member

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  17. San8422

    San8422 Active Member

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    I am extremely disappointed regarding practices in Indian pharma. Some issues highlighted by US FDA: -

    1. Lack of hygiene at production facility (Shame!!!!:()
    2. Lack of quality control (Shocking :eek:)
    3. Faking drug testing data (Criminal:mad:)
    etc...

    Are the people in the pharma companies management, professionals or amateurs? Are they running pharma company or paan shop? Why do they need US FDA warnings to improve their manufacturing processes? Why don't they themselves ensure hygiene, follow best manufacturing procedures? Do they value the lives of the patients who use their products?

    Also when US FDA gives observations why don't Indian companies share these observations with their investors? Don't they have any shame while saying "We work closely with the regulatory authorities to ensure that we maintain the highest quality standards (nice joke :D) . As a policy we never comment (publicly) on these interactions." (So they don't believe in transparency)

    They are so shameless that they blame the US FDA for singling India out. US FDA is the most efficient institution in the world according to Pratap Bhanu Mehta (Great scholar of public institutions. Also a columnist at Indian Express). If US FDA gives clearance then other countries (which have their own FDA's) also give clearance. Such is the reputation of this great institution.

    First inspection happens wherein observations may be noted. Later warning may be issued. In the warning letter US FDA lists out wrong practices very clearly and also gives suggestions. Enough time is given to pharma companies to respond (in both observation and warning). If company is unable to respond within the specified time due to valid reasons then time extension is also given. The procedure is transparent and fast. In spite of all this Indian companies don't do anything. Due to their apathy, US FDA is forced to take action and it issues import alert then they shamelessly cry that 'FDA Inspector was racist', 'Indian companies are being targeted purposely' etc....
     
    Last edited: Jan 19, 2016
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  18. San8422

    San8422 Active Member

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    Last edited: Jan 19, 2016
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