India, being among the largest pharmaceutical manufacturing spots, has a prominent and rapidly growing presence in the global pharmaceutical industry. Being a world leader in manufacturing of generic drugs, it occupies a 20% share in the global supply by volume, and also supplies 62% of the global demand for vaccines.
The Covid-19 outbreak has significantly led to a rise in the demand for generic drugs. Also, demand for drugs like paracetamol, ibuprofen among others and specific drugs to treat diabetes and asthma have escalated ever since the outbreak. This in turn has led to a positive impact on the pharma stock prices.
Since India enjoys a cost advantage, the drugs manufactured here are more affordable and have reached the shores of developed economies such as the UK, US, EU and Japan, well known for their safety and quality.
Owing to the crisis, the Indian stock markets witnessed one of the greatest crashes causing disruptions in all sectors causing them to jolt. However, Indian pharma stocks clocked massive buying and have recorded a huge spike in export orders.
Similar uptrends have been witnessed in the pharma stocks of other countries as well. This growth index is testament to the fact that pharma stocks have turned overwhelmingly positive on a global basis.
As the whole world is consumed in battling the coronavirus, measures like quarantine, lockdown and civil curfew resulted in consumer demand to plunge. The unmet needs of a home-bound population have splurged the demand for necessities offering growth for sectors like pharma and food which has a first- mover advantage.
Diagnostic laboratories have also witnessed a huge rise in their share prices. This rise was prompted by rising awareness asthe rife spread of the virus has warranted people to take precautionsand a multi- fold increase in the number of check-ups for prevention and diagnostic lab testing.
The demand for certain medical devices such as oximeters, ventilator machines, test kits, face masks, and disinfectants have soared high as patients under self-care and isolation require these devices for self-monitoring.
The industry was already earning double-digit profits and seeing expansions but the increased spending on infrastructure and research along with increasing awareness has resulted in a positive impact in its growth. Most of the largest pharmaceutical MNCs have made multi-million dollar donations in cash, materials, services, antibacterial gel and medication as an effort against the pandemic. Also, The Government of India has already announced an investment of INR 10000 crores to incentivise production of APIs in India.
The digitalization of pharmaceutical factories is likely to impact employment in the sector. Indian drug makers have invested around Rs. 52,000 crores on research and development in the last five years and are likely to spend more over the next decade owing to their rich cash flows, leading to impressive opportunities for investors in the upcoming years.
During these unprecedented times, pharmaceutical companies are responding to the challenges arising from interruption in supply chains resulting them to recast business operations.
Covid-19 pandemic has brought this sector to the limelight and under-investment in this sector has become visible which has made the entire world realise the need to reimagine supply chains. Considering the complexity and the limited transparency around the inter-dependency of pharma supply chains across the world, it is difficult to measure the scale of disruption for individual corporations.
There is a need to create a more responsive structure with improved infrastructure, capacity and build a sturdy and viable ecosystem and a formal mechanism in which partnerships and collaborations among government and non-government research institutions, academia and the start-up ecosystem can thrive. The domestic pharmaceutical industry’s inventory lying with trade has soared high since the nationwide lockdown was announced. Taking into account these factors in the existing conditions, the golden run of pharma stocks is unlikely to subside.