Nifty Pharma Gains On GST Tax Cut, US Biosecure Act
The 20-stocks Nifty Pharma trades 1.14 per cent higher at 2,327 levels led by top gainer Granules India with 4 per cent gain
The sectoral index, Nifty Pharma gained more than 1 per cent in the Tuesday trading session as the stocks gained after the goods and services (GST) tax cut on cancer drugs.
The GST council voted to reduce the 12 per cent tax on cancer medications to 5 per cent. Prices for cancer medications Trastuzumab Deruxtecan, Osimertinib, and others will drop as a result of this tax cut, which is intended to lower the cost of cancer treatment in the nation.
The 20-stocks Nifty Pharma traded 1.14 per cent higher at 2,327 levels led by top gainer Granules India with 4 per cent gain. Divis Lab and Laurus Labs gained more than 3 per cent, while Gland Pharma and IPCA Labs traded more than 2 per cent higher.
In the Union Budget of 2024, the government had previously eliminated the standard 10 per cent customs duty on these three cancer medications. Astra Zeneca, which produces the majority of these medications in India and accounts for 62 per cent of sales of oncology treatments benefitted from these tax breaks.
Due in large part to predictions that it will encourage other pharmaceutical companies to pursue cancer therapy development, the tax cut also improved sentiment for other pharmaceutical companies.
Furthermore, the US government enacted a draft of the Biosecure Act, which forbids the US government from awarding funds or entering into contracts with organisations that deal with ‘biotechnology companies of concern.’
Five Chinese companies were expressly mentioned in the article, WuXi AppTec, BGI Genomics, MGI Tech, Complete Genomics, and Wuxi Biologics.
This eagerly anticipated move raised expectations that more contracts in the contract development and manufacturing organisation (CDMO) sector would be awarded to Indian businesses.
Subsequently, the stock prices of Divi's Labs, Suven Pharma, and Piramal Pharma soared more than 3 per cent.
The stock prices of several pharmaceutical companies, including Laurus Labs, Divi's Laboratories, Suven Pharma, Ajanta Pharma, and Syngene International, also rose to their 52-week high.
Brokerage firm, Incred Equities noted out that enterprises seeking less expensive alternatives to China are finding India to be a desirable CDMO destination due to low manufacturing prices, foreign direct investments, and government incentives like the Production-Linked Incentive (PLI) plan.
