image showing a pharma company as investors look for top pharma stocks to invest
India is often called the world’s pharmacy. This phrase had a new meaning during the pandemic when India supplied vaccines to many countries across the globe. The pharma segment in India is one of the major industries in the country with a significant contribution to the GDP. India is the largest provider of generic medicines globally accounting for 20% share by volume. This industry saw huge swings during the pandemic and is seen as one of the strongest sectors of the economy. This has many industry experts quite bullish on the pharma sector. Discover the top-performing stocks in the pharmaceutical sector and uncover key insights about this thriving industry.
Read More: Health insurance portability in India – All you need to know
Here are the top pharma stocks to consider investing in 2023:
Sun Pharmaceutical Industries Ltd holds the distinction of being India’s largest pharmaceutical company. It is a prominent player in the pharmaceutical industry, specialising in the manufacturing, development, and marketing of an extensive portfolio of branded and generic formulations, as well as Active Pharma Ingredients (APIs). With a global presence, the company and its subsidiaries operate multiple state-of-the-art manufacturing facilities worldwide, engaging in trading and related activities that extend to markets across the globe.
The key details of this company are tabled below. (Figures are as of 19 June 2023).
| Category | Details |
| Market Capitalization | Rs. 2,40,233 crores |
| PE Ratio | 28.39 |
| Return on Equity | 15.69% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 54.48% |
| Share price | Rs. 1,015.00 |
| Dividend Yield | 1.15% |
The trailing returns of Sun Pharmaceutical Industries Limited are tabled below
| Period | Trailing Returns |
| 1 year | 27.90% |
| 3 years | 27.67% |
| 5 years | 12.63% |
| 10 years | 7.76% |
The company was formed in 1935 and has its headquarters in 1935. Cipla Limited along with its subsidiaries is one of the biggest manufacturers and sellers of pharma products in India. The company also has a strong customer base in The US, South Africa, and other countries. The company offers many APIs and various other formulations targeting many severe ailments.
The key details of this company are tabled below. (Figures are as of 19 June 2023).
| Category | Details |
| Market Capitalization | Rs. 81,655 crores |
| PE Ratio | 29.14 |
| Return on Equity | 12.52% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 13.46% |
| Share price | Rs. 1,011.25 |
| Dividend Yield | 0.84% |
The trailing returns of Cipla Limited are tabled below
| Period | Trailing Returns |
| 1 year | 10.55% |
| 3 years | 16.35% |
| 5 years | 10.77% |
| 10 years | 10.29% |
Founded in 1983 by the esteemed Dr. Prathap C Reddy, a visionary leader in healthcare, Apollo Hospitals stands as India’s pioneering corporate hospital, leading the charge in revolutionising private healthcare in the nation.
With a strong foothold in the healthcare landscape, Apollo Hospitals has risen to become Asia’s premier integrated healthcare services provider. It boasts a comprehensive presence across the healthcare ecosystem, encompassing Hospitals, Pharmacies, Primary Care & Diagnostic Clinics, and various innovative Retail Health models.
The key details of this company are tabled below. (Figures are as of 19 June 2023).
| Category | Details |
| Market Capitalization | Rs. 73,948 crores |
| PE Ratio | 90.37 |
| Return on Equity | 14.56% |
| Debt Equity Ratio | 0.31% |
| Promotor’s Holdings | 29.33% |
| Share price | Rs. 5,145 |
| Dividend Yield | 0.29% |
The trailing returns of Apollo Hospitals are tabled below
| Period | Trailing Returns |
| 1 year | 39.01% |
| 3 years | 56.30% |
| 5 years | 37.34% |
| 10 years | 17.92% |
Torrent Pharmaceuticals Ltd founded in 1959 is a frontrunner in the Indian pharmaceutical industry and is actively involved in the research, development, manufacturing, and marketing of generic pharmaceutical formulations. As the flagship company of the esteemed Torrent Group, it is worth noting that the group also has a significant presence in the power and city gas distribution sectors. The company has operations not only in India but also in the US, Brazil, Germany, and other countries.
The key details of this company are tabled below. (Figures are as of 19 June 2023).
| Category | Details |
| Market Capitalization | Rs. 62,881 crores |
| PE Ratio | 50.56 |
| Return on Equity | 20.12% |
| Debt Equity Ratio | 0.40% |
| Promotor’s Holdings | 71.25% |
| Share price | Rs. 1,851.10 |
| Dividend Yield | 1.18% |
The trailing returns of Torrent Pharmaceuticals Ltd are tabled below
| Period | Trailing Returns |
| 1 year | 34.30% |
| 3 years | 13.35% |
| 5 years | 20.01% |
| 10 years | 24.21% |
The company is engaged in research, development, production, marketing, distribution, and sale of pharma products in India. The company was initially known as Cadila Healthcare Limited and was changed in February 2022 to Zydus Lifesciences Limited. They have a huge presence in the US, Latin America, Asia Pacific, and Africa. Remaining true to its brand promise of being dedicated to life in all its dimensions, Zydus continuously strives to innovate and address unmet healthcare needs. It maintains an unwavering focus on its mission of creating healthier and happier communities worldwide, reaffirming its commitment to making a positive impact on global healthcare.
The key details of this company are tabled below. (Figures are as of 19 June 2023).
| Category | Details |
| Market Capitalization | Rs. 56,112 crores |
| PE Ratio | 28.62 |
| Return on Equity | 11.71% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 74.98% |
| Share price | Rs. 555.80 |
| Dividend Yield | 1.08% |
The trailing returns of Zydus Lifesciences Limited are tabled below
| Period | Trailing Returns |
| 1 year | 65.56% |
| 3 years | 15.36% |
| 5 years | 6.33% |
| 10 years | 13.36% |
Pharma Stocks can be a good addition to an investment portfolio for multiple reasons. The demand for pharmaceutical products is continuously increasing due to factors like population growth, ageing demographics, and rising healthcare awareness. This industry is considered to be a stable sector and one of the major pillars of the economy. The government also recognising the rising demand for healthcare and pharmaceutical products in the country and abroad has been providing huge support to the industry. This includes implementing many suitable policies, providing tax incentives, and also implementing regulatory reforms.
The pharmaceutical industries too have invested heavily in research and development and development of new drugs and treatments. Many Indian pharmaceutical companies have a strong global presence, exporting medicines and generic drugs to various countries. This global reach also opens up opportunities for expansion and increased revenue streams. As the healthcare sector expands in India, driven by rising incomes and improved access to medical services, pharmaceutical companies are poised to benefit from increased healthcare spending.
Coupled with all these factors, the pharma sector in the country is a good investment bet for the vast majority of investors. However, it is important to have a clear understanding of the financials of the company and other relevant factors like the investment horizon, growth potential, risk and returns expectations while picking stocks from this sector.
The pharma sector has seen a huge push in investments not only from the government but also from the FDI segment. The total FDI investment in this segment has been continuously increasing to the tune of 21.46 billion for the period between April 2000 to March 2023. The pharmaceutical market in India is projected to exhibit a CAGR of 10.7% during the period between 2023-2028 which indicates a significant growth potential. Factors like evolving lifestyles and international confidence in Indian companies contribute to the positive outlook for pharmaceutical firms, enabling them to overcome growth obstacles.
The top company in the pharma industry in India is Sun Pharmaceutical Industries Limited in terms of market capitalization.
The Indian pharmaceutical industry is anticipated to expand and reach a market size of approximately US$ 65 billion by 2024 and is projected to further grow to around US$ 130 billion by 2030.
Some of the factors to be considered while investing in pharma stocks include the fundamentals of the company, the competition and the growth potential of the company and the industry as a whole, the regulatory framework of the government, assessment of the investment risk and the management of the company, etc.
The Indian government has raised the allocation to the healthcare sector by Rs 2,954 Crores, increasing it from Rs 86,200.65 Crore in the previous fiscal year to Rs 89,155 Crore in the ongoing fiscal year of 2023-24.
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