This pharma stock gets the Budget tonic

Budget has scrapped the basic customs duty on cancer drugs Trastuzumab Deruxtecan, Osimertinib, and Durvalumab

In a key announcement, the Union Budget has scrapped the basic customs duty on cancer drugs Trastuzumab Deruxtecan, Osimertinib, and Durvalumab. The extant duty was 10 percent.

One interesting beneficiary of this announcement is Astrazeneca Pharma India Ltd, which is owned by MNC AstraZeneca plc. These drugs are manufactured by Astrazeneca in the US/UK and are imported to India.

The company launched Trastuzumab Deruxtecan in India in January this year for the treatment of breast cancer. As recently as March, the company received an approval from the Central Drugs Standard Control Organisation (CDSCO) to import for the sale and distribution of Trastuzumab Deruxtecan for two new indications.

In its annual report, the company mentions that in the last financial year Durvalumab (Imfinzi) was adopted as a standard care for indicated patients with advanced Biliary Tract Cancer (BTC). The rapid adoption and growth of Imfinzi in BTC was the key driver for the overall growth of the brand in the FY24.

While these are recent developments, Osimertinib (Tagrisso) is the company’s key offering for the treatment of lung cancer. Tagrisso is one of the Top Ten oncology brands in India as per IPSOS MAT Jun ’23 and continues to be the largest oncology brand by sales for AstraZeneca India.

Reduced custom duties for the key drugs would help in better affordability for patients in India and should aid the company’s sales. It is notable that the company gets 62 percent of sales from oncology.

However, the EBITDA margin at 14 percent is not impressive. Further, the stock is trading at an elevated trailing valuation multiple of 78x EV/EBITDA.