Mumbai: Shares of pharma companies involved in
contract drug manufacturing
slumped on Monday after the US left the so-called
Biosecure Act
out of a key defence bill. The legislation was aimed at blacklisting some Chinese companies from doing business with US-funded research and contracts. If the Act was included, it would have benefited Indian companies. Nonetheless, analysts remain optimistic about the prospects of these shares.
Shares of
Syngene International
dropped 5.7%,
Piramal Pharma
fell 4.2%, Lauras Labs and
Neuland Laboratories
declined 3% and Divi's Laboratories fell 2.8% on Monday. The BSE 500 was down 0.1%.
"Despite the US softening its stance recently, we believe that the outlook for Indian CDMO should not change much as companies across the globe are increasingly looking to adopt the China+1 strategy and India looks poised to provide the best alternative," said Prathamesh Masdekar, research analyst at StoxBox.
Earlier this year, US lawmakers resoundingly voted in favour of the legislation.
"The US Biosecure Act was poised to positively influence the Indian API (active pharmaceutical ingredient) CDMO industry as global pharmaceutical stakeholders increasingly seek alternatives to China," said Masdekar.
In 2024, Neuland soared 223%, Piramal Pharma rose 85%, Divi's jumped 52%, Syngene shares gained 23% and Laurus advanced 32%.
The segment is poised to do well despite the concerns, said Pankaj Pandey, head of fundamental research at
ICICI Direct
"While the delay in the implementation of Biosecure Act is a bit negative for Indian CDMO (contract development and manufacturing organisation), factors such as improving biotech funding in the US, Novo Nordisk acquisition of second largest CDMO player Catalent along with China+1 factor would continue to keep the bullish outlook intact," said Pandey. Piramal Pharma is his top pick.
He said that Indian CDMOs have also been witnessing higher enquiries.
