Piramal Pharma shares zoomed over 5 percent and hit a record high of Rs 243.99 on September 11, with heavy trading volumes and strong growth prospects driving sentiment for the stock.
At 10:33 am, shares of the drugmaker were trading at Rs 238.70 on the NSE, slightly off its record high. As many as two crore shares of the company changed hands on the exchanges so far, double the one-month daily traded average of one crore shares.
Meanwhile, growth prospects for the company also improved after the US passed the draft Biosecure Act, aimed at prohibiting the government from contracting with, or providing grants to, companies that do business with a “biotechnology company of concern.” It specifically names five Chinese companies: BGI Genomics, MGI Tech, Complete Genomics, WuXi AppTec, and Wuxi Biologics.
This much-awaited development sparked hopes of more contracts in the Contract Development and Manufacturing Organization (CDMO) space being diverted to Indian companies. While the draft bill was passed in the US House of Representatives on Monday, expectations of its passage have been brewing for a long time.
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In anticipation, several US drugmakers had already begun exploring supply bases outside China, with India being a popular destination. Along those lines, the management of Piramal Pharma, in an interaction with CNBC-TV18, also stated that they have seen increased exploratory discussions and customer inquiries. However, the firm remarked that no major decisions have been made yet.
Nonetheless, analysts expect the impact of the Biosecure Act to come into play in the medium term. Analysts at Bank of America Securities believe the likely revenue impact from the Biosecure Act will largely be in the small molecules segment and is some time away (around 12-24 months) for Indian companies.
Regardless, even the expectations of a spike in work making its way to India as US companies shift manufacturing bases away from China were enough for investors to lap up shares of Piramal Pharma, a major beneficiary of this shift. The growing optimism over this shift has helped Piramal Pharma deliver over 30 percent gains in the past month.
Also Read | The coming booster for Indian pharma stocks: US Biosecure Act
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