Good news is somewhat of a rarity when it comes to Indian pharmaceutical companies and the US generics market. Investors were pleasantly surprised when Dr Reddy’s Laboratories Ltd won a case, allowing it to continue selling a generic version of Suboxone, a drug used to treat opioid addiction.
Subaxone was supposed to be a game changer for the stock. There is a new player in the game, it appears. Dr R is currently restricted by a court order from launching this drug.
I had turned bullish on this stock sometime ago on the Subaxone case win some time ago but had to give up that stance when the case went into appeals in the US courts.
Stock has been unable to breach past the last major supply zone near 2760. Rallies have been slow affairs and hence not much evidence of impulse-type movements yet.
So, unless stock can stage a breakout past 2765 in the near future fresh longs cannot be considered. Even if it moves past, there are many past price points for it deals with. All these are marked on the chart attached here.
Hence even if there is a breakout progress is going to be slow. Not really a surprise as this is currently the bane of most of the pharma majors. With the kind of history most of these pharma leaders have had, people are more than willing to buy into them with the smallest news flow. But they have been doing that for the last 12-18 months and have nothing to show for it! It is because each of them is caught up in such a price spiral of its own making on the way down! This staggered move shall be there for every pharma stock. So dont expect those smooth upward moves that they used to exhibit during bullish times. Remember that they are currently in a bear phase.