INVESTMENTS in PHARMA SECTOR can make you a BEGGAR ??

If you are investing in the pharmaceutical industry just with the belief in your mind that " this sector will grow in and after Covid Pandemic ", then you are indeed going to be a beggar.

We have seen a sudden uprise and growth in the industry concerning medicines since the past few months. 

After the coronavirus lockdown which was approved "worldwide", this was greatly shocking and confusing to the investors.

Where all the industries were closed and production was stopped completely for the first few months, the analysts saw a greatest downfall in the Nifty and Sensex after The Great Depression. 

However, the pharma index continued to rise for a few hundred points even in the most severe situations.

This forced the investors to believe the pharma companies rising in the pandemic to be " fundamentally so strong to beat the extreme situations ".

This belief was totally wrong and the growth of this particular sector was only due to the following reasons :

1. India is the biggest producer and exporter of drugs to the foreign countries, the major customer being The USA so it is a sector which brings huge amount of dollars and foreign exchange to the country.

2. In the process of making vaccines for the world, hydroxychloroquine, a drug used to cure malaria, was found to be effective to stop the growth of corona to some extent.

The rise in demand of this particular drug from India, led to the sudden uprise of the drug companies exporting it and the market rose.

3. As the laboratories and pharma companies worldwide are in competition with each other to get "THE FIRST MOVER ADVANTAGE " and create name by making the vaccine first and launching in the market, small progress news often hikes the market value of the share.

This is very clear that the company which first becomes successful in the Vaccine Making Process will be the one who will gain a lot of profits, atleast for 2 - 3 years.

Investors, want to earn profits from this opportunity, which forms the major reason for storming the market.

4. A common belief prevalent among the retail investors is that increase in demand of sanitizers, masks and sterilization machines will increase the growth of the pharma sector in the long run.

It is not entirely correct as a lot of FMCG Companies have started making sanitizers better than the pharma companies and then a lot of competitors have entered this segment, making it difficult to generate high revenues. 

In order to give high profits and growth, the sector has to consistently increase its sales over the period of time.

If the above rule is followed by any the companies of any industry, it is bound to become fundamentally strong and stable.

The above reasons were only for the Covid lockdown period and they doesn't mesn that the pharma sector has no company which can give investors their share from the high earnings. 

Some of the top companies include :

1. Abbott India

2. Pfizer

3. Smruthi Organics

4. IOL Chemicals and Pharma

5. Tyche Inds

6. Aurobindo Pharma

7. Dr. Reddy's Lab

8. Cipla

9. Cadilla Healthcare 

10. Alkem Laboratories 

11. Ajanta Pharma

12. Ipca Pharma

DISCLAIMER : Information provided in this piece of article is for educational purpose only. These are not stock recommendations of any kind. Please read the fundamentals of the company properly before making a investment.

Regards,

Ankita Gupta ❤

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