Taro Q4 results spook pharma majors, shares tank

Shares of pharmaceutical companies stood among top losers in Tuesday's trade with BSE Healthcare index plunging nearly 3 per cent.

Gufic Biosciences slipped 6.13 per cent, followed by Aurobindo pharma (down 5.94 per cent), Orchid pharma (down 5.57 per cent), Cipla (down 4.89 per cent), Morepen Laboratories (down 4.76 per cent), Sun pharma (down 4.33 per cent), Lincoln Pharma (down 4 per cent), Syngene (down 3.96 per cent) and Dishman (down 2.82 per cent).

Among other top losers, RPG Life sciences declined 3.06 per cent.

Sun pharma and Divi’s Labs settled lower by 3.17 per cent and 3.29 per cent, respectively.

Sarabjit Kour Nangra, VP Research - Pharma, Angel Broking said, “The pharma stocks were spooked by the quarterly results of Taro Pharmaceuticals, which is the overseas arm of Sun Pharma.”

Taro Pharmaceuticals reported a 26 per cent decline in revenues for the March quarter and a 28 per cent fall in net profits compared to the year-ago period.

“The EBITDA margin, an indicator of operating profitability of Taro, actually saw 1,600 basis points shrinkage, which raised concerns over the operating economics of Taro Pharmaceuticals,” said Nangra.

However, shares of Sequent scientific closed 4.73 per cent up at Rs 123.90. It was followed by Caplin Point Laboratories Ltd. (up 3.82 per cent), Fortis (up 0.74 per cent), HCG (up 0.20 per cent) and GlaxoSmithKline (up 0.08 per cent).

With weak results expected from Sun Pharma and Aurobindo as well as a negative guidance issued by Glenmark, Indian pharma sector looks likely to operate in a difficult environment, according to market experts.