Indian pharmaceutical stocks were in focus on Tuesday after the country's drug regulator announced that Johnson & Johnson had withdrawn its proposal seeking accelerated approval for local trials of its Covid-19 vaccine. The US company, however, on Monday said it was still in talks with the Indian government over its vaccine.

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At 10 am, Dr Reddy's traded 0.09 percent higher, Aurobindo Pharma was up 0.45 percent and Strides Pharma Science up 0.73 percent. Cadila Healthcare traded 0.32 percent higher while Pfizer was up 0.36 percent.

Dr NK Arora, chairman of the Covid-19 working group under the National Technical Advisory Group on Immunization, said one shouldn't expect the imported mRNA vaccines to be available in India immediately.

Talks were stuck over indemnity and liability clauses, and these issues have to be seen in a holistic context, he said.

"The Johnson & Johnson vaccine is in the same league as Moderna and Pfizer. They also have these clauses of indemnity and liability. I would understand it is around the same scenario... Even Pfizer never submitted their application for clearance," Dr Arora, chief of the government's vaccination advisory body, told CNBC-TV18.

"I think similar discussions are going on between government and vaccine manufacturers," he said.

Europe's medicines regulator, last month, listed Guillain-Barré syndrome, a rare nerve-degeneration condition, as a possible uncommon adverse effect of Johnson & Johnson's Covid-19 vaccine after reviewing 108 instances reported globally, Reuters reported.

Earlier, Pfizer had withdrawn its application for emergency-use authorisation of its coronavirus vaccine in India, after failing to meet the drug regulator's demand for a local safety and immunogenicity study.

The pickup in India's vaccination drive points to limited space in the Indian market, say analysts.

"There is not enough leeway for Johnson & Johnson to capture space in the Indian market for Covid vaccines as there are already enough players there," AK Prabhakar, Head of Research at IDBI Capital, told CNBCTV18.com.

"Besides, Cadila is also set to join three Covid vaccine producers in India... So it would be too late for Johnson & Johnson to enter the market anyway given the pace of vaccinations," Prabhakar added.

Last month, Indian drugmaker Zydus Cadila said it had applied for emergency use approval of its three-dose Covid-19 vaccine that showed the efficacy of 66.6 percent in an interim study. Some say the vaccine could become the second homegrown shot if regulators consent.

As of Monday's close, the Nifty Pharma index -- which tracks shares of 10 major players in the sector -- is up more than 12 percent so far this year. The Nifty50 index has risen 13.61 percent during this period.

The Nifty Pharma index has rebounded 119 percent since March 2020, when the government had imposed the first lockdown to curb Covid infections.