Jubilant Pharmova at 52-week High: Know Why The Stock Has Zoomed?

Jubilant Pharmova Ltd is a blended pharmaceuticals company that has three major segments of pharmaceuticals, development services and contract research with a market cap of Rs.11,237.28 Cr. The company has been expanding its subsidiaries and engaging with various segments within the pharmaceutical industry. Glenmark Pharma, Cipla and Dalton Pharma are known to be some of its competitors.

Voluntary Action Indicated

US FDA (Food and Drug Department) conducts inspections for drug manufacturing units in India and Jubilant Pharmanova’s Roorkee facility was put under inspection earlier this year. The company has recently stated that after the inspections, they have received a VAI which is given when violations or objectionable conditions are found but no further regulatory/ administrative action is taken. In this case, the department did not see the need for action on this.  So, they have cleared the USFDA inspection and received a go-ahead with their Roorkee facility.

Peek Into The Business

Over the recent years, the US generics market has seen pricing pressure resulting in significant losses for Jubilant Pharmnova’s subsidiary Jubilant Cadista Pharmaceuticals. So to revive profitability, the company has decided to outsource manufacturing from the Roorkee facility. This outsourcing is going to improve the margins by reducing manufacturing and other overhead costs. Now this is going to hopefully result in eventual profit for the company. Today, after the news broke, the market showed an immediate reaction and the share price rallied to touch a 52-week high. The closing of this inspection seemed to have given the investors a sigh of relief. 

Conclusion:

The pharmaceutical industry has gained momentum since the outburst of COVID-19 and the pharma players are doing a variety of things to compete in the industry. Abiding by the rules and regulations, along with good fundamentals and maintaining their reputation helps the company gain confidence among the investors. But is Jubilant Pharmova up for further rallies or not, we’ll only have to wait and see! 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.