Stockshastra #47 – Indian Pharmaceutical Sector – Shifting from a defensive to a growth sector

Last Updated on March 4, 2020

Defensive sectors  are those that are known to fall less than the market as well as show less appreciation This is because earnings of companies from these sectors are relatively stable and predictable both in good times as well as bad.

But, a ‘defensive sector’ which has proven different is the Pharma Sector.  While Sensex crashed by close to 55% (in the period Dec-2007 to Jan-09), the BSE Healthcare index dropped by around 34%. However, what has been surprising is that the BSE Healthcare Index has outperformed Sensex over the last 2 years registering a growth of 52% CAGR as compared to the 42% clocked by Sensex. Few companies that led this growth were Cadilla Healthcare, Dr. Reddy’s Laboratories, Ranbaxy etc.

So, how does the Pharma sector actually work? And what are the factors that will drive its growth?  Also get a glimpse of the top players in this sector and whether they are worth investing in.

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