Top Pharmaceutical/Medicine Sector Shares for 2024 Investments

Over the past five decades, Indian pharma stocks have experienced significant growth in domestic and global markets. From contributing just 5% of the medicine consumption in 1969 (95% share with the global pharma), the share of “Made in India” medicines in the Indian pharma market is now a robust 80% in 2020.

Thus, considered the third-largest in terms of volume and the thirteenth-largest in value, the Indian pharma companies are attracting a new set of investors heavily. Therefore, pharma sector shares are suitable for top-down and bottom-down investing, which are also considered defensive stocks. 

So, let’s understand some of the popular Indian pharma companies or medicine companies to invest in 2024 and what factors are shaping the industry. We will also highlight the best pharma stocks to buy in India for long term along with some popular pharma smallcases.

What are Pharma Stocks in India?

Pharma stocks in India are the stocks of companies that operate in the pharmaceutical industry, which includes the research, development, manufacturing, and distribution of drugs and medicines. These companies are involved in producing various types of medicines, such as prescription drugs, over-the-counter medicines, and generic drugs. Some common medications produced by the Indian pharma industry include antibiotics, cardiovascular drugs, painkillers, and anti-inflammatory drugs.
Thus, investing in pharma shares in India might be a lucrative option for investors as the pharmaceutical industry significantly contributes to the Indian economy. The industry has been growing rapidly in recent years due to several factors such as increasing demand for generic drugs, favourable government policies, and growing healthcare infrastructure. Therefore, investors interested in investing in the Indian pharma industry can consider buying from pharma shares listed companies on the stock exchanges in India. However, investors must do their own research or consult their financial advisor before investing.

List of Top Pharma Stocks in India to Invest in 2024

The pharma sector has contributed significantly to India’s economic growth as one of the top 10 sectors in reducing the trade deficit and attracting Foreign Direct Investment (FDI). If you are figuring out which pharma stocks you can invest in, then have a look at the list of best pharma stocks India mentioned below:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in the high and low price pharma shares list is from 20th March, 2024. However, for real-time updates on stock prices and market trends, visit smallcase stocks collection today!

Top Pharma Companies in India: An Overview

Here is the overview of the top 10 pharma stocks in India. The following stocks are on an educational pharma stocks list curated above of the best pharma stocks to buy now::

Sun Pharmaceutical Industries Ltd

Sun Pharmaceutical Industries Ltd (Sun Pharma) is an Indian multinational pharmaceutical company with its corporate hub situated in Mumbai, Maharashtra. Globally, it ranks as the fourth largest top pharma company in india in the generic pharmaceutical sector based on revenue. Sun Pharma’s extensive product portfolio encompasses a wide spectrum of generic and branded pharmaceuticals, encompassing tablets, capsules, injectables, and topicals. It is also one of the best stock in pharma sector on our pharma stock list. 

Cipla Ltd

Cipla Limited is a pharmaceutical company. The Company offers its products for the therapeutic areas, including cardiovascular, children’s health, dermatology & cosmetology, diabetes, HIV/AIDS, infectious diseases & critical care, malaria etc. It is also considered one of the best pharmaceutical stocks in India.

Dr Reddy’s Laboratories Ltd

Dr Reddy’s Laboratories Ltd (Dr Reddy’s), headquartered in Hyderabad, Telangana, is an eminent Indian multinational pharmaceutical enterprise. The company stands at the forefront of both generic and branded pharmaceutical manufacturing. Dr. Reddy also distinguishes itself with a substantial commitment to research and development in the field of novel drug formulations. It is also one of the top pharma shares on our pharma company name list. 

Torrent Pharmaceuticals Ltd

Torrent Pharmaceuticals Limited, the flagship of the Torrent Group, is a prominent player in the global pharmaceutical market. Specializing in Cardiovascular, Central Nervous System, Vitamins and Nutrients, Gastro-Intestinal, and Anti-Diabetes therapies, the company has established a dominant presence in India and operates across more than 40 countries. It is also one of the best stocks in pharma sector on our list. 

Gland Pharma Ltd

Gland Pharma Ltd, initially known as Gland Pharma Private Limited, was established on March 20, 1978, under the Companies Act 1956. It received its certificate of incorporation from the Registrar of Companies Andhra Pradesh in Hyderabad. Later, on December 5, 1994, the company’s name was changed to Gland Pharma Limited through a special resolution passed by shareholders. This led to its conversion into a public limited company under the Companies Act 1956, and a new certificate of incorporation was issued on April 25, 1995. Gland Pharma Limited primarily specializes in manufacturing injectable formulations. It is also one of the top pharmaceutical company in India on our pharma company list. 

Abbott India Ltd

Abbott India is a healthcare company engaged in pharmaceuticals business. The Company has a portfolio of offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals. Abbott India has some of the best pharma stock in India. It is also one of the best medicine company in India on our list. 

Alkem Laboratories Ltd

Alkem Laboratories Limited is engaged in the development, manufacture and sale of pharmaceutical and nutraceutical products. It has also been listed as one of the best pharma company in India for 2024. It is also one of the India top pharma company on our list. 

Zydus Lifesciences Ltd

Zydus Lifesciences Ltd is an India-based life sciences company. The Company has a pipeline for Biologics and Vaccines. Zydus Lifesciences can be considered as one of the best pharma shares in India. 

Aurobindo Pharma Ltd

Founded in 1986 by PV Ramprasad Reddy and K Nityananda Reddy, Aurobindo Pharma emerged as one of India’s leading pharmaceutical companies. Operations commenced in 1988 at a single unit in Puducherry, specializing in semi-synthetic penicillin (SSP). By 1992, the company had gone public, with its stock listed on exchanges in 1995. As of December 28, 2023, Aurobindo Pharma Limited boasts a market capitalization exceeding ₹63,800 crore. Over the span of three years, Aurobindo Pharma’s share price has surged by more than 14%.

Lupin Ltd

Lupin Limited, an Indian multinational pharmaceutical company headquartered in Mumbai, stands as a global leader in generic medicine manufacturing, operating in over 100 countries. Established in 1968 by Dr. Desh Bandhu Gupta, Lupin began as a vitamin manufacturer before expanding its portfolio to include over 1,000 diverse products. Recognized for its expertise in generics, Active Pharmaceutical Ingredients (API), specialty, and biologics, Lupin’s journey started with a significant government order for supplying iron and folic acid tablets for maternal and child healthcare programs after its incorporation in 1972.

Mitigate Challenges with smallcase

Like any other investment, investing in pharma medical company shares in India comes with its own challenges. 

However, with the help of financial advisors or investing in trustable platforms like smallcase, you can easily tackle these challenges by doing portfolio investing by creating a demat account online. Let’s learn how. 

• Regulatory Risks: The pharma industry is subject to stringent regulations. However, the pharma stocks in smallcase portfolios (such as Pharma Tracker) have a proven track record of compliance that can mitigate this risk.
• Patent Risks: The expiration of patents for major drugs can lead to increased competition. However, smallcase portfolios that invest in pharma company shares with a strong pipeline of drugs and a focus on R&D can help mitigate this risk.
• Currency Fluctuations: The Indian pharma industry relies heavily on exports, which currency fluctuations can impact. However, pharma smallcase portfolios have a strong presence in domestic and international markets that can help mitigate risks.
• Competition From Generics: The pharma industry is highly competitive, with many established players having a strong brand reputation. However, if you invest in the listed pharma companies in India with high-quality products, you can mitigate the risk of generic competition.

Pharma Tracker smallcase by Windmill Capital

Types of Pharma Stocks in India

In India, the pharma sector share list is divided into three categories based on the market capitalization of the pharma companies listed in NSE:

• Large-Cap Pharma Stocks: These are the largest pharma companies in India, with a market capitalization of more than ₹20,000 crores. These companies typically have a strong brand presence, diversified product portfolios, and significant R&D capabilities. Examples of large-cap pharma stocks in India include Sun Pharma, Dr. Reddy’s Laboratories, and Cipla.
• Mid Cap Pharma Stocks: These are medium-sized pharmaceutical companies in India, with a market capitalization between ₹5,000 to ₹20,000 crores. These mid-cap companies may have a more focused product portfolio and less diversified revenue streams compared to large-cap companies. Examples of mid-cap pharma stocks in India include Torrent Pharma, Alkem Laboratories, and Biocon.
• Small-Cap Pharma Stocks: These are smaller pharmaceutical companies in India, with a market capitalization of less than ₹5,000 crores. These small-cap companies may have a more niche product portfolio and limited R&D capabilities than larger ones. Examples of small cap pharma stocks in India include Aarti Drugs, Suven Life Sciences, and Granules India.

COVID 19 impact: Pharma Shares Evolving Healthcare

On March 11, 2020 the deadly COVID-19 was declared a pandemic and six weeks later, China reported a new respiratory virus. That said, we all know what we all faced. Thus,  the Indian pharmaceutical industry has emerged as a winner in the post-pandemic world while handling the vulnerable population with care and sensitivity. 

The Indian pharma manufacturers export nearly half of the pharma production, both in volume and value, to the US, UK, South Africa, Russia and other countries. As a result, the country established a leading position in the global generic top pharma share price of pharma companies, which has earned it the title of ‘Pharmacy of the world’. 

Popularly called the ‘archetype of affordable healthcare’, India is the third-largest manufacturer of drugs worldwide in terms of production volume, accounting for 10% of the global total. 

Additionally, many Pharma companies in India have redesigned their drug development to make it a blockbuster to provide the nation with the best medicinal care.

What is the Pharma NIFTY Index?

The Pharma Nifty Index is an index of the National Stock Exchange of India (NSE) that comprises the top 10 pharmaceutical companies listed on the exchange. These best pharma stocks for long-term  are selected based on market capitalization, liquidity, and other factors. The index provides a benchmark for the overall performance of the pharmaceutical sector in India.

So, when the Pharma Nifty Index goes up, it means that the pharmaceutical sector is performing well, and when it goes down, it means that the sector is underperforming. Additionally, it is a commonly used indicator by investors and analysts to track the performance of the Indian pharmaceutical industry.

Why Invest in Pharma Stocks?

Pharmaceutical stocks have historically provided stable returns, driven by growth opportunities both domestically and in export markets. The demand for pharmaceuticals remains robust due to lifestyle changes leading to an increase in chronic diseases and heightened awareness of treatment options, supported by rising insurance penetration.

Companies are actively pursuing growth strategies, including expanding production capacities, investing in research and development, and leveraging technology for innovation.

Considering these factors, investing in pharmaceutical stocks presents an attractive opportunity. However, investors should be cautious and conduct thorough analysis. Factors to consider include company financials, management expertise, research and development efforts, regulatory compliance, and product pipeline.

Factors to Consider Before Investing in Pharma Companies

Before investing in pharma stocks, there are several important factors to consider apart from pharma share prices. Here are five key factors:

• Domestic and Global Demand: The demand for pharmaceuticals is driven by many factors. Some include an ageing population, increasing healthcare spending, and the prevalence of diseases. To determine if the industry is poised for growth, analyze the current and future demand for pharma stocks.
• Research and Development Investments: The pharmaceutical industry relies heavily on research and development (R&D) to develop new drugs and treatments. It’s important to evaluate a company’s R&D investments and pipeline to determine if they are investing in the right areas and have a strong pipeline of potential new products.
• Regulatory Environment and Government Policies: The pharmaceutical industry is highly regulated, and government policies can impact a company’s ability to bring new products to market. It’s important to stay current on regulatory changes and procedures affecting the industry and specific companies.
• Intellectual Property Rights and Patent Expirations: Patents providebig and small pharma companies in India with exclusive rights to manufacture and sell a drug for a set period of time. It’s important to evaluate a company’s patent portfolio and the timing of patent expirations to determine the potential impact on revenue.
• Competition and Mergers and Acquisitions: Since the pharmaceutical industry is highly competitive, companies may engage in mergers and acquisitions. Therefore, evaluate a company’s match, annual growth, and change in pharma stock prices if it is well-positioned in the market.

Factors Affecting Investments in Pharma Stocks

Factors Impacting Pharmaceuticals Sector Stocks are:

• Success of Clinical Trials and Drug Pipeline: The outcomes of clinical trials heavily influence stock performance, serving as indicators of potential revenue growth.
• Approvals and Regulatory Landscape: Regulatory processes and approvals play a crucial role in shaping drug commercialization timelines, thereby affecting stock prices.
• Pricing Pressures and Healthcare Policies: Changes in pricing regulations, reimbursement policies, and healthcare cost reduction efforts have significant implications for sector stock performance.
• Patent Expirations and Generic Competition: Patents’ expiration and generic competition’s emergence affect company profitability and stock performance.
• Market and Economic Dynamics: Market conditions, economic indicators such as GDP growth, interest rates, inflation, and investor sentiment all impact stock prices within the pharmaceutical sector.

Features of Pharma Company Stocks in India

Investors eyeing the pharmaceutical sector in India should be aware of distinctive features that characterize pharma company stocks.

• Regulatory Environment: Pharmaceutical penny stocks are significantly influenced by regulatory dynamics. Stay informed about updates from regulatory bodies like the Food and Drug Administration (FDA) and the Pharmaceuticals and Medical Devices Agency (PMDA).
• R&D Pipeline: The Research and Development pipeline of a pharmaceutical company is a critical aspect. Evaluate the company’s investment in developing new drugs and the potential impact on its market position.
• Market Competition: The level of competition within the pharmaceutical market is intense. Best Pharmaceutical Companies in India with a diversified portfolio and effective strategies to navigate market competition may present better resilience.
• Global Presence: Many Indian pharmaceutical companies have a global footprint. Assess the geographical reach of a company, as it can impact revenue streams and vulnerability to international market fluctuations on the penny pharma stocks.
• Patent Expiry: The expiration of patents for key drugs can significantly impact a pharma company’s financials. Stay informed about patent expiry dates to anticipate potential shifts in the market landscape.

Benefits of Investing in Pharma Stocks in India

There are several benefits to investing in pharma stocks, particularly in India, which has a thriving and rapidly growing pharmaceutical industry. Here are some of the key benefits:

• Steady Demand: Pharma stocks are known for their steady demand, as people require medicines regardless of the economic climate. As a result, pharma stocks are considered relatively defensive and can provide investors a stable source of income.
• Strong Growth Potential: The Indian pharma industry is growing rapidly, with the government actively promoting the sector through various initiatives. The industry is expected to grow at 12-14% CAGR providing significant growth potential for investors.
• High Profitability: The pharmaceutical industry tends to have high-profit margins due to the significant investment required for research and development. This high-profit margin might translate into higher returns for investors.
• Dividends: Many pharmaceutical companies have a strong track record of paying dividends to shareholders. This can provide a source of passive income for investors.

Risks of Investing in Pharma Stocks in India

Investing always involves risk, and pharmaceutical stocks are no different. Understanding key risk factors is crucial when selecting the best pharma stocks.

Regulatory Environment

• The pharmaceutical industry operates under heavy regulations, and changes in government policies, especially regarding price controls and exports, can directly affect top pharma company India revenues.
• Investors should monitor overall healthcare policies in markets where companies focus on exports to gauge potential impacts on future demand and market share.

US Market

• For many major pharmaceutical companies, the US market is pivotal for selling generic drugs.
• Investors in these companies need to be vigilant about regulatory risks, especially considering the historical pricing pressure in the US market.
• Recent indications suggest a potential easing of pricing pressure on the best pharma stocks in india for long-term, but ongoing scrutiny from the United States Food and Drug Administration on Indian best pharma companies in India’s manufacturing units poses a risk, with the issuance of warning letters being a significant negative factor.

Currency Fluctuations and Operational Risks

• The export-oriented nature of the Indian pharma industry makes it susceptible to currency fluctuations, directly impacting revenues and the bottom line.
• Additional risks include variations in raw material and packaging costs, higher freight rates, and disruptions in the supply chain.

How to Select the Best Pharma Stocks for Investing?

Here are a few steps and measures you can take to potentially select some of the best pharma stocks for investing in India in 2024:

• Assess Financial Health: Examine earnings reports, debt levels, and cash flow of pharmaceutical companies to gauge stability and financial robustness.
• Evaluate Drug Pipeline: Scrutinize the company’s pipeline of drugs. A diverse and promising pipeline indicates resilience in the face of industry changes.
• Consider Regulatory Environment: Understand the regulatory landscape. Approvals and compliance are critical factors influencing pharmaceutical success.
• Stay Informed on Industry Trends: Keep abreast of industry trends, breakthroughs, and global healthcare dynamics. Market competition and geopolitical factors can significantly impact pharmaceutical stocks.
• Analyze Historical Performance: Dive into the historical performance of the stocks under consideration. Assess past trends, volatility, and how stocks have responded to market shifts. This data provides insights into a stock’s resilience and growth potential.

Who Should Invest in Pharma Stocks?

Investing in pharmaceutical stocks can be attractive for a variety of investors, including:

• Long-Term Investors: Pharmaceutical stocks often offer stability and long-term growth potential. Investors with a horizon of several years or more can benefit from the consistent demand for healthcare products and the potential for research and development to drive future growth.
• Income-Oriented Investors: Many pharmaceutical companies have a history of distributing dividends to their shareholders. Income-focused investors seeking a regular stream of dividend income may find pharmaceutical stocks appealing.
• Risk-Averse Investors: Relative to some other sectors, pharmaceuticals tend to experience less volatility. Investors who prioritize stability and lower risk may consider pharmaceutical stocks as part of their portfolio.
• Value Investors: Value investors seek out the best pharma shares to buy that the market may undervalue. The pharmaceutical industry often includes companies with strong fundamentals that can be temporarily undervalued, creating opportunities for value investors.
• Healthcare Sector Enthusiasts: Those with a strong interest in the healthcare sector, an understanding of its dynamics, and faith in its long-term growth prospects may find pharmaceutical stocks particularly appealing.

As always, investors must do their own research and/or consult their financial advisor before investing.

To Wrap It Up…

In conclusion, the Indian stock market has demonstrated resilience and growth potential in 2023. As we move further into the year, several pharma companies have garnered investor interest and shown promising performance.
Investing in popular stocks through smallcase could be an effective way for investors to capitalize on growth opportunities. With Pharma Tracker smallcase, you can efficiently track and invest in pharma companies.

FAQs