Investors shaved 248 billion rupees, roughly $2.6 billion, off Indian healthcare stocks as the BSE Hospitals Index slipped 5%. Sixteen of the 17 stocks in the gauge finished lower. In Mumbai trading, Apollo Hospitals Enterprise Ltd. fell 5.7%, Fortis Healthcare Ltd. dropped 6.3%, and Max Healthcare Institute Ltd. declined 5.3%.
As reported by the Press Trust of India, the nation's highest judiciary urged the central authorities to initiate an inquiry into allegations that hospitals direct patients to buy medicines only from in-house or approved chemists, especially where margins are high. The court described markups of up to 10 times on cancer drugs as "carnage" and asked whether a uniform 16% margin should apply to all medicines.
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Big private hospital chains lean on sales of medicines and ancillary services, so tighter rules on drug margins or restrictions on compulsory in-house pharmacy purchases could bite. Analyst Deepika Murarka at Choice Equity Broking Pvt. told Bloomberg News that the reaction looks sentiment driven because the matter remains before the courts and no final decision has been made. She added that any price cap could pressure high-margin pharmacy revenue for a few larger players, including Apollo and Max.
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