FDA remains key issue for investors in healthcare

New Delhi, April 18: The US Food and Drug Administration (FDA) remains the key issue for investors in the pharmaceuticals and healthcare sector, according to a report released on Tuesday by global investment banking firm Jefferies.

The investment firm's officials met investors in Asia to discuss healthcare sector - pharma and services.

"The FDA remains the key issue for investors. FDA issues dominated most conversations. We highlighted to investors how the issues are cultural and cannot have a short term fix. These will require substantial re-training, changes in incentive policies and strict monitoring through consultants and internal compliance," the note said.

According to "India/Healthcare: A Uncertainties Diminish Interest - Asia Roadshow Feedback", investors agreed with the investment firm's view that companies need to build redundancy layers in compliance and facilities for key products.

"These will lead to increased cost impacting margins," it said.

Further, the feedback note said most investors while looking for ideas, had concerns on the rising event risks.

"We had multiple conversations on the high uncertainty in earnings and how valuations are still not in comfort zone. We highlighted that pharma investments need to be bottom-up and not a top-down call, going forward," it said.

The firm said the increased risk in pharma space has resulted increased interest in healthcare services among investors.

"Hospitals were a key discussion point. While there were concerns on the government focus on affordable healthcare - capping on stent pricing and other measures that can come in - it is still considered a strong growth story," it added.