Pharmaceuticals sector has been one of the key sectors where Indian companies have created a global brand for themselves besides software. Pharma outsourcing into India and low cost Healthcare services have become the key growth areas for India unveiling extensive opportunities for it to be at par with the global markets. In addition, the inherent potential of biotechnology has also attracted many new companies and this is also a key growth area for Indian companies.

IISL has developed CNX Pharma Index to capture the performance of the companies in this sector. CNX Pharma Index was computed using market capitalization weighted method from the launch date till October 08, 2010. However, it shifted over to the computation of the index using free float market capitalization weighted method with effect from October 11, 2010. CNX Pharma Index has base date of January 1, 2001, indexed to a base value of 1000.

The CNX Pharma Index represented about 73% of the free float market capitalization and 66 % of the aggregate turnover of the last six months for the period September 30, 2010 of the Pharmaceuticals Sector Universe respectively. The total traded value for the last six months of all CNX Pharma Index constituents stood approximately at 2.50% of the traded value of all stocks on the NSE.

Following criteria has been held out for the inclusion of the pharmaceutical companies in this index:

1. Company's market capitalization rank in the pharmaceutical universe should be less than 500

2. Company's turnover rank in the universe should be less than 500

3. Company's trading frequency should be at least 90% in the last one year.

4. Company should have a minimum track record of 3 years of operations with a positive net worth.

5. A company, which comes out with an IPO, will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.