Deutsche's top picks are Torrent Pharma, Aurobindo Pharma and Cipla which all are buy calls.
Global brokerage house Deutsche Bank said it preferred to take exposure into Indian businesses in the pharma sector, forecasting a 13 percent CAGR for India revenues over the next two years.
The brokerage gave a buy call on Torrent Pharma, Aurobindo Pharma and Cipla while it reiterated a hold rating on Sun Pharma, Lupin and Dr Reddy's Labs.
"Prescription share gains will continue for Indian companies. Operating leverage will drive earnings growth of 20 percent over FY19-21 and return ratios are set to improve as capex intensity moderates," Deutsche said.
As for the US pharma sector, the brokerage said it saw signs of stability.
The US pricing pressure and USFDA concerns hit the pharma sector badly for more than a year now. The Nifty Pharma index fell 14 percent in last one year and on June 21 it was down a percent.
Sun Pharma, Cadila Healthcare, Lupin, Glenmark Pharma and GSK Pharma were biggest losers among pharma stocks, down 10-40 percent.
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