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Dr Reddy’s, Sun Pharma shares rise a day after India approves COVID-19 vaccines for emergency use

Shares of Dr Reddy’s and Divi’s Laboratories edged up about 2.2% in intraday trade while Sun Pharma shares jumped 3.4%

Shares of pharmaceutical companies Sun Pharma, Dr. Reddy’s Laboratories and Divi’s Laboratories closed with gains on Wednesday and ranked amongst the top five gainers on the benchmark NSE Nifty 50 index. This comes a day India’s drug regulator sped up the country’s preparedness to battle the threat of new variants and approved two new vaccines and one drug. Dr Reddy’s stock price soared 1.88% while that of Divi’s Laboratories gained about 2.13% during the day’s trade on Dalal Street. Sun Pharma shares zoomed 3.4% on NSE’s Nifty 50.

The NIFTY Pharma Index, which gauges the performance of the pharmaceutical sector, rose 1.7% to end at 14,072.90 points. Laurus Labs was the top gainer on the index, jumping 3.59%, followed by Cadila Healthcare

On Tuesday, the Central Drug Authority approved Serum Institute of India’s vaccine Covovax, Biological E’s jab Corbevax and anti COVID-19 pill Molnupiravir for emergency use. “All these approvals will further strengthen the global fight against the pandemic. Our Pharma Industries are an asset for the entire world,” Health minister Mansukh Mandaviya said in a tweet after the approval.

India’s pharmaceutical sector witnessed “robust growth” this year led by COVID-19 related drugs opportunity, brokerage firm ICICI Securities said in a note. In its outlook for 2022, ICICI Securities noted that the omicron variant can potentially affect growth, adding that the learnings from the first and second wave of COVID-19 should cushion some of the negative impact.

“Indian branded pharma market to grow at ~10-11% on a normalised base with additional benefit from COVID-19 related drugs opportunities,” the brokerage firm said in its outlook for the next year.

ICICI Securities has given a buy rating to both Dr Reddy’s and Sun Pharma with a target price of Rs. 5,534 and Rs. 959 apiece respectively.

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