Introduction:
Syngene International Limited is a leading contract research and manufacturing organization (CRMO) headquartered in India. It offers integrated services from discovery and development to commercial-scale manufacturing for pharmaceutical, biotechnology, and agrochemical industries. Known for its innovation-driven approach, Syngene plays a critical role in drug development for global clients, including several Fortune 500 companies. The company’s state-of-the-art facilities and scientific talent have helped it expand in key global markets while supporting India’s pharmaceutical infrastructure.
Objective:
To determine the Beta of Syngene International and understand its statistical relationship with the broader market index, Nifty50.
Literature Review:
New Approaches to Pharmaceutical Market Assessments:
Gourdon, Daniel et al. (2023) proposed dynamic methodologies to evaluate pharmaceutical market trends beyond sales data. Emphasis was placed on assessing production and distribution metrics as reliable indicators of performance. The research also discussed the implications of industry consolidation through mergers and acquisitions.
Impact of Pharmaceutical Growth on Economic Development:
David (2017) explored the connection between pharmaceutical growth and GDP expansion. Using panel data from 1990 to 2015, the study confirmed a strong correlation in developing economies where pharmaceutical activities significantly contribute to employment and trade.
Data Collection:
Weekly (Friday) closing price data for Syngene International and Nifty50 was collected for the period 1st January 2024 to 31st December 2024, comprising 249 observations. A simple linear regression analysis was conducted using Syngene’s closing price (Y) regressed on Nifty50 closing price (X).
Data Analysis:
Regression Equation:
Syngene = -439.02 + 0.0519 × Nifty50
- Beta (Coefficient for Nifty50): 0.0519
- R² (Coefficient of Determination): 0.60
- F-Value: 69.50
- p-Value: < 0.00001
Interpretation:
- The beta of 0.0519 indicates a very low sensitivity of Syngene’s stock price to movements in the Nifty50 index.
- The R² of 0.60 means 60% of Syngene’s price movements can be explained by Nifty50 movements, showing a strong market alignment despite a low beta.
- The p-value indicates statistical significance at the 1% level.
- The low beta suggests Syngene is less volatile and more stable compared to the market, making it an appealing choice for risk-averse investors.
Conclusion:
Syngene International exhibits a statistically significant, though low-beta, relationship with the Nifty50. This makes the stock stable and defensive, suitable for conservative portfolios. Despite its low sensitivity, the high R² implies Syngene generally moves in line with market trends, potentially due to broader sectoral alignment or institutional ownership.
References:
- Karin Gourdon, Laurent Daniel, Takuya Adachi, Emilie Berger (2023). New approaches to pharmaceutical market assessments. OECD Science, Technology and Industry Policy Papers No. 140.
- David Perry (2017). 2016 Status Report on Major Equipment Procurement. SPP Research Papers, University of Calgary, Vol. 10(22).