Sebi probing surge in pharma scrips

The Securities and Exchange Board of India has launched investigations into the sharp rise in pharmaceutical company scrips on the bourses.

It has asked the stock exchanges to furnish all trade information on stocks of pharmaceutical companies, including details on the identity of big buyers or sellers on these counters.

It has also asked the exchanges to examine the trading pattern in these stocks to check for any evidence of rampant price manipulation in these counters.

Bombay Stock Exchange officials said, "The exchange, on a regular basis, provides the regulator with a lot of data on trading patterns. This includes data relating to various sectors, including pharmaceuticals."

In the past one month, the combined market capitalisation of 34 Indian bulk drugs and formulations companies surged 22.7 per cent to around Rs 50,320 crore.

The market capitalisation of 37 pure bulk drug makers has surged 37 per cent to Rs 5,212 crore (Rs 52.12 billion) in the month to September 5.

In the last quarter, their market capitalisation has risen 115 per cent. In the last two months, the Alembic scrip price surged 47.61 per cent to close at Rs 402.95 on Monday, with volumes rising from 17,660 shares on July 1 to 119,000 shares on September 8.

The Aurobindo Pharma scrip price has appreciated by 55.30 per cent in the last two months to close at Rs 615.30 on Monday.

Similarly, the price of the Cipla share gained 33.60 per cent between July 1 and September 8 with huge volumes.

The Fulford (India) scrip price jumped 97.58 per cent in the last two months to close at Rs 255.70 on Monday.

The latest surge in pharmaceutical company stock prices comes after the World Trade Organisation passed a resolution allowing poor nations to import cheaper drugs to tackle diseases such as AIDS, tuberculosis and malaria.

The WTO decision is seen as an opportunity for Indian pharmaceutical companies to tap the global market. The WTO's decision allows member countries to export pharmaceutical products under compulsory licences within the terms set out.

The major conditions are that supplies should be made in good faith in order to deal with public health problems and not for industrial or commercial policy objectives.