Elections results don’t matter much for pharma stocks

While the BSE Healthcare Index is marginally up in tandem with the broader benchmark indices, the Loksabha Election results are unlikely to change the fortune of pharma stocks. The sector has its own battles to fight – which are more regulatory, global and endemic in nature. Resolution of FDA clamp downs, working through the price collusion litigation in the US and growing business amidst headwinds are among the challenges that pharma companies must overcome. The outcome of the Indian elections – possible continuity of the government at the centre – will hardly have impact on the pharma stocks.

Little wonder that most of the individual stocks are trading flat or even negative. Sun Pharma, Lupin, Dr Reddy’s Labs (DRL) and Apollo Hospitals are trading almost flat. The fourth quarter performance of the companies is a bigger trigger than the results of the elections. The stocks of Lupin, DRL and Cipla have already reacted to their companies’ fourth quarter performance.

Consider this: DRL was among the few stocks to have dropped significantly on a day when the Indian bourses posted their largest single-day gains on back of exit polls predicting a BJP-led government at the Centre. The stock closed 6% lower on Monday due to subdued fourth quarter performance.


Sun Pharma, the largest player in the pharma pack, is set to announce its fourth quarter results next week – that will be the key trigger for the stock.

Nevertheless, the continuing of BJP-led government shall provide a reinforcement to the healthcare initiatives rolled out by the Modi government. In the event of a massive mandate, the Modi government’s ambitious healthcare plan - Ayushman Bharat - is likely to be rolled out more decisively and expenditure towards building healthcare infrastructure is expected to be undertaken.