How Indian Pharma Industry Performed in the Last Decade? Impact of a Non-macroeconomic Variable and Financial Distress

The pharmaceutical industry in India is a significant part of the country’s international commerce, providing appealing channels and prospects for investment. The non-macroeconomic variable, like the COVID-19 pandemic, had a significant impact on the pharmaceutical industry, as well as other industries. This study examines the financial situation of pharma firms and the overall pharma industry using the Altman Z-score before and during the COVID period. Hence, the study is undertaken in three window periods. The study further describes the pharma industry’s stock return to market return and finally, the impact of overall Z-score and its ratios impact on stock return by panel data modeling. The result depicted an improved financial situation in the pharma sector due to improved investors’ confidence and higher beta in pharma stocks compared to market movement during the COVID period. Lastly, it has been analysed that Working Capital to Total Assets (WC/TA) is the significant ratio in predicting the stock return.