Cancer Drugs Impact Pharma Stocks as US BIOSECURE Act Advances

Cancer Drugs Gain Attention in Pharma Stocks Surge

Shares of pharmaceutical companies as well as contract drug manufacturing companies (CDMOs) experienced significant gains in intraday trade on Tuesday, after a double dose of good news on the domestic as well as US market front. On Monday, the 54th GST Council of India, in its meeting, reduced the GST rate on cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib, and Durvalumab from 12 per cent to 5 per cent. Earlier, the government had removed the basic 10 per cent customs duty on these three cancer drugs in the Union Budget of 2024.

Details of Key Cancer Drugs

• Trastuzumab Deruxtecan is used to treat specific types of breast cancer and non-small cell lung cancer (NSCLC) in adults.
• Osimertinib is indicated for NSCLC in patients with certain abnormal epidermal growth factor receptor (EGFR) genes.
• Durvalumab is employed alone or with other medications to treat various cancers, including biliary tract cancer, endometrial cancer, hepatocellular carcinoma, non-small cell lung cancer, and small cell lung cancer.

Post the announcement, AstraZeneca India's share price zoomed up to 4.3 per cent to ₹7,069 per share during intraday trade on BSE. The company manufactures all three drugs in India. Alembic Pharmaceuticals, which also manufactures the Osimertinib drug in India, saw its stock price surging 2.6 per cent to ₹1,236 intraday.

US BIOSECURE Act Boosts CDMO Stocks

Additionally, the stocks of Indian CDMOs were in focus on Tuesday after the US House of Representatives passed the BIOSECURE Act with a vote of 306 to 81 on Monday. This Bill aims to reduce the US biopharmaceutical industry's dependence on China and limit technology transfer to the country. Specifically, it names five Chinese companies and affects collaborations with these entities.

This positive development impacted the stock prices of Indian CDMO companies, which appreciated by up to 6 per cent intraday. Shares of Laurus Labs rose as much as 5.55 per cent, while Akums Drugs and Pharmaceuticals locked in a 5 per cent upper circuit and Piramal Pharma's shares rallied 5.80 per cent.

Furthermore, Divi’s Laboratories shares surged 4.12 per cent and Syngene International stock soared 4.99 per cent during intraday deals.

Analysts' Insights on the Market

According to analysts, rival contract manufacturers located in India, Japan, Europe, and America stand to benefit significantly from the bill. The Indian market is becoming increasingly attractive for CDMO companies like Syngene and Aurobindo Pharma, thanks to government incentives like the production-linked incentive scheme, foreign direct investments, and low manufacturing costs.