What will be the future of PHARMA SECTOR

hi guys I am a new bee ....I started investing about 3 months ago...you all guys are analysts,well educated...coming to matter as a general topic with my friend about share investing ....in which he is trading from past 5 years ....I said if we invest in pharma sector the future is bright....but he is saying that pharma will not do well in coming 1-2 years and subsequently decline forever...I asked why...he said that most of the pharma manufactures the generic drugs and export them to foreign countries and the revenues will increases exponentially because of strong dollar to rupee ....but the foreign governments like Europe and USA are making monetary policies to bring down the prices of the imported generic drugs.....and hence there will be no strong revenues and growth...and no option but to decline....plz share your thoughts about this topic...as I am a new bee ...this type of factors giving me nightmares...as i invested in pharma which weighs 50 % in my portfolio .....

Plz reply your thoughts and suggestions ASAP ....
Regards
Karthik55859

 

There is no merit in such worries.... you will lose good opportunity to invest. The pharma sector is to grow to $80billion size say experts. Buy pharma stocks like JB Chem with good cash balance, high dividend, top mgmt etc and reasonable valuations.

Will Buy Pharma Stocks On Every Decline: Dimensions Consulting -Oct 30

 

Pharma sector is a GOLD MINE

With a country of this size and what is happening to US on the generic side, our companies are just goldmines waiting to be picked by the MNCs on the world. It is going to happen and we will have big bonanza there. So, these are companies which you do not sell; every correction you buy.

Sun Pharmaceutical may have indifferent kind of a year for the Ranbaxy but leave it aside for a year, it will pickup. However, you have seen the results, the Reddys’s, the Torrent’s, Lupin kind of disappointed but Lupin had a very good run if you look at the last year’s stock price. It had an excellent run last year so you will have those correction periods.

So, as a sector, you have got to be very clear that in the market that we are seeing today with an economy which is struggling, Indian economy is struggling today, that is the fact, this is one sector which does not have demand issue and a pricing issue. It may have pricing issue down the line but today it doesn’t. So, do not dessert this sector.

https://www.moneycontrol.com/news/m...ly-economy-struggling-dimensions_3872981.html

 

You must read my post
POWER OF PHARMA !! Period (2008-2015); 7 years of WEALTH CREATION !!

https://rakesh-jhunjhunwala.in/forum...iod-2008-2015-7-years-of-wealth-creation.449/

In the pharma midcap space, we aggressively buy JB Chemicals; it is available at 10 PE on one-year forward earnings basis. The company is sitting on cash pile. The company has around Rs 500 crore cash while debt is as low as Rs 100 crore. These are the two stocks we like in the pharma space.

https://articles.economictimes.india...s-research-advisory-pharma-space-jb-chemicals

Apart from JB Chem you can look at Shilpa Medicare (FDA approval trigger), Ajanta Pharma (consistent outperformer),

 

thank you sir ...for your valuable suggestions...now i can defend my freind about my decision...sir i have already invetsed in jb chem,sun pharma,sharon bio,syngene,srtides,ajantha,suven life,dishman,bodal chem,vinyl chem,astec,marsans pharma....

apart from these sir can you suggest any stocks...i personally like torrent,lupin,dr reddy,glenmark,

all freinds plz reply
karthik55859

 

How many pharma stocks you want? Why you are going for bogus like Sharon? Keep to quality stocks like JB Chem, Ajanta, Torrent. Buy two and allocate about 25% of portfolio.

 

Sir if i hold d aboce pharma stocks for 5years den how much return dat i can expect ......atleast double within 5 years from now ????

 

congratulations @Karthik55859 on getting started, I'm not an analyst or a professional but can understand what makes 1+1, your friend has been trading for 5 years and has his reasons to believe that the sector will be in dumps for various reasons

• Generics - it is what is helping patients (you can look it up yourself to see how generic meds are helping patients & what generic drugs mean)
• ForEx fluctuation & monetary policies - well, lets leave it out
• The USA (Obamacare), countries in the EU & UK (NHS) have a lot of social security programs unlike India and to keep the cost low, governments have to promote generics which cost a fraction of the branded drug.
• Apart from the overseas market, consider the domestic market size of drugs for different diseases, India is the diabetes capital of the world. Diabetes management is a long term and ongoing process. There is a rise in lifestyle diseases among the urban population.

Pharma is broad - companies that are just contract manufacturers (CRAMS), bulk drugs, research, biotech, niche/speciality, domestic/MNC, etc. In India, new drugs are being brought under price control by the National Pharmaceutical Pricing Authority, so charging exorbitant prices and having a very high margin on such drugs is out of the question. FDA inspections, product recalls, patent infringements, pricing issues, etc. are a part of the business for pharma companies.

Too Long Didn't Read - If you lose your sleep over price movements and don't understand a business, I'd say do not invest a substantial amount of your portfolio (50%) in it.

 

Stock market exits because of difference of opinions;any sale materialises because of difference of opinions about prospects of the same stock.With this view in mind I intend to submit that THE COMPANY WHICH APPEARS GOOD IS SELDOM A GOOD INVESTMENT -this is my take which ,I accept, has no value against views of many experts of this forum.

 

Maybe there is merit in what you say.... But i have a question which is ....what makes a good investment???

 

Sir,If I may submit ,good popular stocks is not good investment.I am sure you must have baught Aurobiindo when it was not popular.As u know I had also baught at the same level.Company ,with good business model,facing temporary headwnds-by subjective assessment-is a good investment in my opinion.Sir I have wockhardt, baught at around110 about six years back.This is my one critaria of finding good investment. Regards.Wockhardt is still with me.

 

And a good business model includes not branching out into Areas wildly unrelated to its core competencies.. Or do you disagree for its for this very reason i suppose you managed to buy wockhardt at around 110/-?