Shares of contract drug manufacturing organisation (CDMO) players--Divi's Labs, Neuland Labs, Piramal Pharma and Syngene International reeled under pressure on December 9 as uncertainty looms over the passage of the US Biosecure Act.
This came after the Biosecure Act was kept out of a key defence bill, hinting at the US' softening view over Chinese biotech. The defence bill was the best bet for the bill's approval in 2024, and a failure in its passage this year will bear a negative impact, albeit sentimentally on Indian CDMO players.
Caught amid these worries, shares of Neuland Laboratories slumped 9 percent to its day's low, recording its biggest single-day drop in over seven months while others like Divi's Laboratories, Piramal Pharma, Syngene slumped as much as 5 percent in the session so far. Even though all these stocks still struggled with sharp cuts, most of these were now trading off their day's lows.
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The US Biosecure Act aimed to prohibit US life sciences companies from doing business with certain Chinese biotech majors within eight years to safeguard against the potential misuse of US genomic data by the Chinese government and military.
The act specifically targets five Chinese companies—BGI Genomics, MGI Tech, Complete Genomics, WuXi AppTec, and WuXi Biologics—prohibiting the US government from contracting with or granting funds to these entities. With the passage of the draft US Biosecure Act back in September, the bill was supposed to be sent for voting to the US Senate.
The passage of this bill was expected to spark a fresh wave of contracts in the Contract Development and Manufacturing Organisation (CDMO) space being diverted to Indian companies as US innovators look towards moving supply chains out of China.
China's CDMO industry currently commands an 8 percent share of the global market, significantly outpacing India's 2.7 percent share. However, experts see the US Biosecure Act as a significant opportunity for the Indian pharma sector to challenge China's dominance and expand its foothold in the global market.
Also Read | What’s the importance of US Biosecure Act for India?
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