10,763.65156.3
Stock Analysis, IPO, Mutual Funds, Bonds & More

COVID-19 outbreak credit neutral for pharma companies for now: Ind-Ra

Ind-Ra's portfolio consists of 19 pharma-formulation manufacturing issuers that are rated 'IND A-' and above.

PTI|
Last Updated: Mar 13, 2020, 12.46 PM IST
0Comments
Reuters
Pharma-3---Reuters
Ind-Ra's portfolio consists of 19 pharma-formulation manufacturing issuers that are rated 'IND A-' and above.
Ind-Ra has said that the new coronavirus (COVID-19) pandemic is unlikely to impact the rating agency's credit profile of pharma companies in the near term despite the sector's heavy reliance on Chinese API and intermediates. Nonetheless, in case the supply disruption continues over the next three to nine months, the pressures on credit buffers could intensify and rating transitions would be imminent, especially in case of the entities rated 'IND A' and below, India Ratings and Research (Ind-Ra) said in a statement.

Furthermore, if the disruption spills beyond the next 9 to 12 months, some of the higher rated corporates could face downward pressure.

China is the world's largest exporter of active pharmaceutical ingredient (APIs) and intermediates. Approximately 70 per cent of India's total API requirement is met by imports from China.

Ind-Ra's portfolio consists of 19 pharma-formulation manufacturing issuers that are rated 'IND A-' and above.

Among these entities, only nine have their own API manufacturing facilities, and only one entity manufactures intermediates.

The degree of backward integration is lower for players rated 'IND A' or below, thereby making them more vulnerable to supply disruptions vis-a-vis higher rated players.

Even in the case of issuers who are backward-integrated, their own API and intermediates manufacturing capacities might be able to cater to only a limited portion of their requirements.

Furthermore, players with API manufacturing facilities too are likely to be dependent on Chinese imports for supplying the intermediates necessary to manufacture APIs.
(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

Also Read

Share market update: Pharma shares down; Aurobindo Pharma dips 2%

Share market update: Pharma shares advance; Sun Pharma rises 1%

Share market update: Pharma shares dip; Aurobindo Pharma down 2%

Share market update: Pharma shares mixed; Sun Pharma dips 1%

Share market update: Pharma shares advance; Aurobindo Pharma rises 3%

Share market update: Pharma shares advance; Sun Pharma up 1%

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service