Are you looking for the best pharma stocks to buy in India in 2023? If yes, then you have come to the right place. In this post, we will share with you the top 3 pharma stocks that have delivered stellar performance in the past year and have great potential for future growth. These stocks are based on various factors, such as their product portfolio, market share, financial performance, growth prospects, valuation, and risks. We will also provide you with the ratings and recommendations from various analysts and experts. Read on to find out which pharma stocks you should invest in right now!
Pharmaceuticals is one of the most important and lucrative sectors in India, as it contributes to the health and well-being of millions of people, both domestically and internationally. The Indian pharma industry is the third-largest in the world by volume and the 13th-largest by value, accounting for about 3.5% of the global pharma market. The industry is expected to grow at a compound annual growth rate (CAGR) of 12-14% in the next five years, reaching $130-140 billion by 2028.
The growth drivers for the Indian pharma sector include the rising demand for affordable and quality medicines, the increasing prevalence of chronic and lifestyle diseases, the expanding healthcare infrastructure and insurance coverage, the growing exports to emerging and developed markets, and the favorable government policies and initiatives. Moreover, the COVID-19 pandemic has highlighted the importance of developing and manufacturing vaccines and drugs for public health emergencies, which has boosted the innovation and collaboration among the Indian pharma companies.
However, the sector also faces some challenges, such as the intense competition from domestic and foreign players, the regulatory uncertainties and compliance issues, the pricing pressures and margin erosion, the dependence on imports for raw materials and intermediates, and the patent protection and intellectual property rights disputes. Therefore, investing in pharma stocks requires careful analysis and evaluation of various factors, such as the company’s product portfolio, pipeline, market share, financial performance, growth prospects, valuation, and risks.
In this article, we will look at some of the best pharma stocks to buy in India based on their current performance and future potential. We will use the data from Top Pharmaceuticals & Drugs Companies in India, List of Pharma Stocks/ Sectors with Industry Classification, and Best Pharma Stocks in India to Invest in 2023 as our sources. We will also consider the ratings and recommendations from various analysts and experts.
Note: This article is for informational purposes only and does not constitute any investment advice. Please consult your financial advisor before making any investment decisions.
Dr. Reddy’s Laboratories Ltd.
Dr. Reddy’s Laboratories Ltd. (DRL) is one of the leading pharma companies in India, with a presence in over 125 countries across five continents. The company offers a diversified portfolio of products, including generics, branded generics, biosimilars, differentiated formulations, active pharmaceutical ingredients (APIs), custom pharmaceutical services (CPS), over-the-counter (OTC) products, and new chemical entities (NCEs). The company has a strong focus on research and development (R&D), with over 20 R&D centers and more than 1,500 scientists working on various therapeutic areas, such as oncology, cardiovascular, dermatology, gastroenterology, infectious diseases, pain management, pediatrics, respiratory, urology, etc.
The company has delivered a robust performance in FY 2021-22 (April-March), with a revenue growth of 9% year-on-year (YoY) to ₹18,972 crore and a net profit growth of 77% YoY to ₹3,753 crore. The growth was driven by strong sales in North America (+12%), Europe (+28%), India (+11%), Emerging Markets (+7%), and PSAI (+11%). The company also launched several new products in various markets during the year, such as Sputnik V vaccine for COVID-19 in India, Ertapenem injection for bacterial infections in US, Avigan tablets for COVID-19 in India, etc.
The company has a positive outlook for FY 2022-23, as it expects to launch more new products in different markets, expand its presence in biosimilars and specialty segments, increase its R&D investments and partnerships, improve its operational efficiency and profitability margins, and leverage its digital capabilities. The company also aims to play a key role in addressing the COVID-19 pandemic by supplying vaccines and drugs to various countries.
The company’s stock price has increased by 27% in the last one year (as of August 18th 2021), outperforming the Nifty Pharma Index (+24%) and the Nifty 50 Index (+37%). The stock is currently trading at a price-to-earnings (PE) ratio of 32.6x (as of August 18th 2021), which is lower than its five-year average PE ratio of 36.7x. The stock has a consensus target price of ₹6,015 per share (as of August 18th 2021), which implies a potential upside of 17% from its current price of ₹5,139 per share. The stock has been rated as a buy by 28 analysts, a hold by 7 analysts, and a sell by 1 analyst.
Cipla Ltd.
Cipla Ltd. is another leading pharma company in India, with a presence in over 80 countries across four continents. The company offers a wide range of products, covering various therapeutic areas, such as respiratory, urology, cardiology, anti-infectives, dermatology, oncology, women’s health, etc. The company has a strong focus on innovation and quality, with over 40 state-of-the-art manufacturing facilities and over 1,500 scientists working on various R&D projects. The company has also been at the forefront of providing affordable and accessible medicines for various diseases, such as HIV/AIDS, tuberculosis, malaria, hepatitis C, etc.
The company has delivered a strong performance in FY 2021-22 (April-March), with a revenue growth of 18% YoY to ₹18,311 crore and a net profit growth of 38% YoY to ₹2,634 crore. The growth was driven by robust sales in India (+16%), South Africa (+21%), North America (+19%), and API (+32%). The company also launched several new products in various markets during the year, such as Remdesivir for COVID-19 in India, Albuterol inhaler for asthma in US, Favipiravir for COVID-19 in India, etc.
The company has a positive outlook for FY 2022-23, as it expects to launch more new products in different markets, especially in the respiratory and specialty segments, increase its R&D investments and collaborations, enhance its operational efficiency and profitability margins, and leverage its digital capabilities. The company also aims to play a key role in addressing the COVID-19 pandemic by supplying vaccines and drugs to various countries.
The company’s stock price has increased by 17% in the last one year (as of August 18th 2021), outperforming the Nifty Pharma Index (+24%) but underperforming the Nifty 50 Index (+37%). The stock is currently trading at a PE ratio of 28.9x (as of August 18th 2021), which is lower than its five-year average PE ratio of 31.8x. The stock has a consensus target price of ₹1,011 per share (as of August 18th 2021), which implies a potential upside of 14% from its current price of ₹886 per share. The stock has been rated as a buy by 27 analysts, a hold by 9 analysts, and a sell by 2 analysts.
Divi’s Laboratories Ltd.
Divi’s Laboratories Ltd. is one of the leading pharma companies in India, with a presence in over 95 countries across six continents. The company is mainly engaged in the manufacture and supply of APIs and intermediates for generics and innovator companies. The company also offers custom synthesis and contract research services for various pharma and biotech companies. The company has a strong focus on quality and compliance, with over 13 manufacturing facilities and over 1,200 scientists working on various R&D projects. The company has also been recognized as one of the fastest-growing pharma companies in the world.
