Best Pharma Stocks in India

18 April 2024
9 min read
Best Pharma Stocks in India
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(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)

India hosts some of the world’s largest pharmaceutical companies known for their robust reputation in mass-producing generic medications. The produced medications are utilised worldwide to treat various illnesses.

The country leads in generic drug manufacturing, accounting for 20% of the global supply by volume and meeting about 60% of the world's vaccine demand.

Pharma Industry in India - A Brief Overview

The Indian pharmaceutical industry ranks third globally in terms of production volume and has seen remarkable growth with a CAGR of 9.43% over the past nine years. India also stands as the largest provider of generic drugs worldwide, with pharmaceutical exports surpassing $25 billion in the fiscal year 2023.

Renowned for its affordable vaccines and generic medications, the industry’s product segments include generic drugs, vaccines, over-the-counter medications and more.

Its domestic pharmaceutical industry boasts a network of 3,000 drug companies and around 10,500 manufacturing units. Additionally, India exports pharmaceutical products to North America, Africa, the Caribbean, the Middle East, Asia and other European regions.

According to CRISIL, sales in India's domestic pharmaceutical sector are projected to grow between 8% to 10% during the fiscal year 2023-24. This growth is driven by domestic expansion and increased exports to regulated markets. Currently, India holds a 5.71% share in the global pharmaceutical market. 

Moreover, the Government of India has implemented several initiatives to strengthen the pharmaceutical sector, including the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), Production Linked Incentive (PLI) Scheme for Pharmaceuticals, Promotion of Bulk Drug Parks Scheme, Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) and more. In addition, as per a recent report by EY FICCI, the Indian pharmaceutical market is expected to reach a value of around US$ 130 billion by the end of 2030.

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Best Pharma Stocks in India 2024 as per Analyst Ratings

Here is a table highlighting the best pharma stocks of 2024 sorted as per analyst ratings. We have made this list based on analyst ratings provided by the I/B/E/S databases. Stock market analysts run a deep research on the stock market before rating a stock :

S.No.

Pharma Stocks in India (as per analyst ratings)

BUY Analyst Rating (in %)

1.

Pfizer

100

2.

Fortis Healthcare

91

3.

Sun Pharmaceutical Industries

89

4.

Ajanta Pharma

85

5.

Abbott India

83

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Top Pharma Stocks in India in 2024 as per Market Capitalisation

The following table mentions the top pharma stocks in India as per market capitalisation:

S.No.

Pharma Stocks in India (as per market capitalisation)

1.

Sun Pharmaceutical Industries

2.

Cipla

3.

Dr Reddy's Laboratories

4.

Zydus Lifesciences

5.

Divi's Laboratories

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Pharma Stocks in India as per Analyst Ratings 

Here is a comprehensive overview of the pharma sector stocks in India for 2024 as per analyst ratings:

1) Pfizer

Operating since 1950, Pfizer Limited is a pharmaceutical company that manufactures, markets, trades and exports pharmaceutical products. It operates its manufacturing facility in Goa and collaborates with various third-party manufacturers across India.

Pfizer's product portfolio includes vaccines, cardiac medications, maternal nutrition supplements, anti-infectives, gastrointestinal drugs, pain relievers, anti-inflammatory drugs, contraceptives, nutrition and immunity boosters and respiratory medications.

Its vaccine business mainly focuses on Prevenar 13, a pneumococcal conjugate vaccine administered to infants, toddlers, adolescents, adults and the elderly as part of primary vaccination.

Pfizer also offers advanced therapies in inflammation and immunology, catering to patients with chronic immune system diseases such as juvenile idiopathic arthritis, ankylosing spondylitis, rheumatoid arthritis, ulcerative colitis and psoriasis. It exports its products to more than 50 countries and conducts research in crucial areas like immunology, oncology and anti-infectives.

2) Fortis Healthcare

Headquartered in Gurgaon, Fortis Healthcare Limited is an IHH Healthcare Berhad subsidiary and is a prominent integrated healthcare services provider in India. With 28 healthcare facilities and over 400 diagnostics centres across India, the United Arab Emirates (UAE), Sri Lanka and Nepal, it is among the country's largest healthcare organisations.

It operates a comprehensive range of healthcare services, including diagnostics, primary care, daycare and speciality hospitals. 

Moreover, it owns and manages multiple multi-speciality hospitals and super-speciality centres across India. These hospitals offer tertiary and quaternary healthcare services, focusing on areas such as cardiac care, cancer treatment, orthopaedics, neurosciences, renal care, gastroenterology, mother and child care, and kidney and liver transplants. Additionally, the company supplies pharmacy items like medical consumables and drugs. 

3) Sun Pharmaceutical Industries

Established in 1983, Sun Pharmaceutical Industries Limited has emerged to become one of the largest generic pharmaceutical companies worldwide. Ranked as the fourth largest speciality generic pharmaceutical company globally, Sun Pharma operates 43 manufacturing facilities.

It supplies high-quality and affordable medicines to over 100 countries. The company manufactures and markets a diverse range of pharmaceutical formulations covering various chronic and acute therapies, including generics, branded generics, speciality products, and complex technology-intensive products. Its extensive portfolio consists of more than 2,000 molecules across multiple dosage forms such as liquids, tablets, capsules, ointments, creams, injectables and inhalers.

Sun Pharma sells over 30 billion doses annually, catering to a wide range of therapeutic areas including gastroenterology, nephrology, neuro-psychiatry, urology, cardiology, oncology, anti-infectives, diabetology, ophthalmology, dermatology and respiratory health. The company’s major markets are present in Western Europe, Australia, Japan, New Zealand, Canada and China.

4) Ajanta Pharma

Headquartered in Mumbai, Ajanta Pharma operates 7 state-of-the-art manufacturing facilities in India. Among these, 6 facilities specialise in manufacturing finished formulations, and one facility focuses on producing Active Pharmaceutical Ingredients (APIs). The company offers a comprehensive range of speciality branded generic products catering to various chronic and acute therapies. 

Ajanta Pharma covers a wide range of therapy areas, such as cardiology, gynaecology, ophthalmology, respiratory, pain management, dermatology and more. It supplies branded generics in emerging countries such as India, South-East Asia, Africa, the Middle East and CIS, while generics are in developed markets of the USA.

Additionally, the company provides multivitamins, antibiotics, eye drops and cough syrups to government bodies in India. Moreover, the company aims to source approximately 50% of its energy requirement through renewable sources like solar by the fiscal year 2025.

5) Abbott India

Abbott India Limited is a subsidiary of Abbott Laboratories with its headquarters in Mumbai. The company specialises in discovering, developing, manufacturing and marketing various branded generic pharmaceuticals, nutritional products, diagnostic tools, and vascular and diabetes devices.

Its product range includes a wide array of multi-speciality drugs, vitamins and treatments for conditions such as vertigo, epilepsy, hypothyroidism, migraine and depression. Abbott India also offers vaccines for typhoid, influenza and diarrhoea.

The company develops pharmaceuticals in different formulations, including liquids, ointments, tablets, capsules, injectables, granules and powder. These products cater to the treatment of gastroenterological, gynaecological, urological and neurological diseases, as well as diabetes, pain and infections.

In India, Abbott develops and distributes more than 600 healthcare products to promote the health and well-being of citizens at all stages of life.

Factors to Consider Before Investing in Pharma Stocks in India

Before buying pharma sector stocks in India, you should keep in mind the following factors:

  • Infrastructure

Evaluate the healthcare infrastructure in India as it directly impacts the pharmaceutical industry. The expanding healthcare infrastructure, combined with increasing demand for healthcare services and products, presents growth opportunities for pharmaceutical companies.

  • Demand

The demand for pharmaceuticals is influenced by various factors such as ageing populations, increasing healthcare spending and disease prevalence. Assess both current and future demand for pharma stocks to understand their potential growth opportunities.

  • Competition and Mergers 

The pharma industry is highly competitive, and companies may engage in mergers and acquisitions to stay ahead. To understand how strong a company is, look at where it stands in the market, and its growth and check if its stock prices have changed recently.

  • Research and Development

Pharmaceutical companies heavily rely on research and development (R&D) to create new drugs and treatments. You must evaluate a company's R&D investments and pipeline to ensure they are focusing on the right areas and have promising new products in development.

  • Government Policies

The pharmaceutical industry is subject to stringent regulations and government policies, which can impact a company's ability to introduce new products. Therefore, you should stay updated with the regulatory changes that could affect the industry and individual companies.

Should You Invest in Pharma Stocks?

While pharmaceutical stocks offer steady returns and growth potential, driven by factors like increasing demand and rising insurance penetration, it is essential to recognise the associated risks.

Regulatory changes, particularly in pricing and exports, have the potential to impact company revenues significantly. The US market, pivotal for many pharmaceutical firms, faces regulatory pressures and FDA inspections that could adversely affect stock performance. Additionally, currency fluctuations pose a risk, given the industry's reliance on exports. 

Despite these challenges, pharmaceutical companies are focusing on growth areas and making substantial investments in research and development. However, before buying top pharma shares, it is essential to conduct thorough research and consider your investment goals and risk tolerance to make informed investment decisions. 

The Bottom Line 

Investing in pharma sector stocks might present stable returns and growth prospects, provided that thorough due diligence has been conducted before investment. If you find conducting independent research challenging, seeking guidance and advice tailored to your investment objectives from a financial expert is in your best interest.

*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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