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Pharma stocks have been on a high after the COVID-19 pandemic but there is a slowdown now being seen in the diagnostics business from the heady highs they had achieved. In an interview with CNBC-TV18, Cyndrella Carvalho, VP-Healthcare and Pharma Lead of JM Financial, shared her insights on the current state of the industry.

JM Financial is most positive on Sun Pharmaceuticals as it is well-positioned in terms of valuations compared to other companies such as Dr Reddy's Laboratories (DRL).

“Our top pick is definitely Sun Pharma and we like the stock and we continue to maintain a ‘buy’ rating on Sun Pharma and we also vouch for DRL at these valuations,” she said.

She also noted that Sun Pharma's domestic growth is expected to remain strong in the coming months.

“We look forward to the Indian market and we believe that it will add value to the Indian growth where Sun continues to grow double digit and strong in-line with the market. The growth for the domestic market for Sun will remain strong," she added.

Also Read | WHO warning: Don't use Marion Biotech cough syrups for children linked to 19 deaths in Uzbekistan

Another company that Carvalho highlighted was Lupin, which she believes will be aided by the launch of a generic version of Suprep. Additionally, she said that investors will be closely watching Lupin's launch of a generic version of Spiriva, which is anticipated to happen in the fiscal year 2024.

“This season would help Lupin in the US specifically because of certain six-month exclusivity that Suprep launch that they have done. All eyes are on Spiriva. We expect this to come in FY24,” she mentioned.

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Carvalho also shared that the third quarter is likely to be a seasonally weak period for diagnostic companies. However, she initiated coverage on Medanta with a ‘buy’ rating, citing the company's potential for growth.

“On the hospital side, we have recently initiated ‘buy’ on Medanta,” she said.

On the other hand, Carvalho mentioned that the third quarter tends to be weaker for hospitals due to seasonality factors.

The United States Food and Drug Administration (USFDA) has issued a warning letter to drug maker Sun Pharmaceuticals specifying violations of norms in its manufacturing facility at Halol in the Panchmahal district of Gujarat.

In its warning letter issued on December 15, 2022, USFDA noted that the company has failed to perform operations within specifically defined areas of adequate size, and failed to use equipment in the manufacturing process, packing, and holding of drug products that are appropriate.

Also Read | USFDA issues warning letter to Sun Pharma's Halol unit

For the entire interview, watch the accompanying video

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