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Nomura Keeps Neutral on Apollo Hospitals and Fortis Amid Cancer Drug Price Caps
M
Moneycontrol•12-10-2026, 11:49
Nomura Keeps Neutral on Apollo Hospitals and Fortis Amid Cancer Drug Price Caps
- •Nomura maintains a Neutral rating on Apollo Hospitals and Fortis following the government's decision to cap trade margins on non-scheduled anti-cancer drugs at 30 percent.
- •The brokerage estimates a mid-to-high single-digit impact on the EBITDA of covered hospitals, though large chains may mitigate losses over time by negotiating better prices and raising service charges.
- •The government's new cap applies to around 110 anti-cancer drugs and is expected to reduce drug prices by 45 to 50 percent, generating Rs 25 billion in annual patient savings.
- •Nomura compares this policy to the 2017 coronary stent price regulation, where hospital financials initially dipped but recovered through higher procedural charges.
- •The brokerage flags broader valuation risks and structural headwinds for the hospital sector, preferring diagnostics and pharmacy stocks like Dr Lal Pathlabs and Medplus instead.
Key Questions Answered
The government approved a 30% cap on trade margins for non-scheduled anti-cancer drugs, measured as a percentage of the maximum retail price.
Nomura estimates that the trade margin cap could have a mid-to-high single-digit impact on the EBITDA of covered hospitals like Apollo Hospitals and Fortis.
Nomura referenced the coronary stent price regulation implemented in February 2017, after which companies eventually offset lower pricing through higher procedural charges.
