INVESTING IN AYUSH INDUSTRY DURING COVID-19
AYUSH stands for Ayurvedic, Yoga and Naturopathy, Unani, Siddha, and Homeopathy. The Ministry of AYUSH was set up by the Government of India for developing education, research, and propagation of indigenous alternative medicine systems in India.
In the absence of a cure or a vaccine to prevent coronavirus, AYUSH has become instrumental in providing measures to increase immunity, the sole option that people can resort to apart from sanitization and social distancing. The AYUSH ministry has passed various measures from time to time for improving immunity as well as other prevention measures.
IS IT WORTHWHILE TO INVEST IN THE PHARMA INDUSTRY DURING CURRENT SITUATIONS?
The COVID-19 pandemic has caused turmoil in markets around the globe with nearly all industries succumbing to the pressure of lower demand other than the ones producing essential commodities leading to temporary shutdown or contraction in their scale of operations. This situation might seem to be a blessing in disguise for the Pharma industry as it could render gains to investors but one must be prudent while dealing with this sector.
Some of the crucial factors for determining when to invest in this sector are listed below: –
• Most of the Indian Pharmaceutical companies are export-oriented and the global economy is in doldrums which may impact their revenues.
• Developments around coronavirus treatment should not be the sole rationale for investing in the pharmaceutical industry. It has to have structural elements and tailwinds added to it.
• The production of Raw materials and Active Pharmaceutical Ingredients (APIs) has stalled causing a global supply chain disruption.
• The pharmaceutical Companies may face shortages once they are back to their full capacities due to the supply chain bottlenecks.
However, since the market crash, this sector has only rebounded and its valuation has been growing but before throwing caution to the wind it is imperative to understand that the reason for growth may not be the potential but a result of the ordeal of other sectors.
Currently, the market is being pushed by the bulls via artificial liquidity. Even though the market is currently favorable for this sector, it is bound to fall in the near future and that shall be the time when one must encash his/her opportunities in the market.
INVESTING OPTIONS IN AYUSH INDUSTRY: –
On the other hand, the companies listed under AYUSH industry have a good opportunity to grow. Many like Dabur and Patanjali have already started to come up with new products and have also taken digs at modern companies of the pharmaceutical sector. So, the AYUSH sector will flourish for the following months but only temporarily until a vaccine is put to use by one of the pharmaceutical companies.
Moreover, most of the companies under the AYUSH industry like Vicco, Dabur, Patanjali, etc. are also engaged in the production of Fast-Moving Consumer Goods which might tend to overshadow the spike seen due to the alternative medicine options.
CONCLUSION: –
Thus, given all the reasons it may not be viable to invest in this sector for longer periods however one can invest for a shorter period in a staggered approach and exit when valuations seem to have run-up. Timely Exit is a very important aspect of investing in this sector during the prevalent situations.
