Divi’s Laboratories, Piramal Pharma to Laurus Labs: Why are pharma stocks skyrocketing today?

Pharma stocks in India witnessed a sharp rally on Friday, with shares of Cipla, Divi’s Laboratories, Piramal Pharma, and others surging up to 5% amid strong buying momentum. The rally came after reports that the US Senate has approved the Biosecure Act, boosting sentiment in the sector. The Nifty Pharma index climbed 1.7% during the session.

Divi’s Laboratories, Piramal Pharma, Wockhardt, Cipla, Laurus Labs, Aurobindo Pharma, Glenmark Pharmaceuticals, Dr Reddy’s Laboratories were among the top gainers in the Nifty Pharma index.

The rally in pharma stocks highlights renewed investor interest in Indian pharmaceutical and contract development manufacturing organization (CDMO) companies.

What is the US Biosecure Act?

According to Bloomberg News, the US Senate passed the Biosecure Act late Thursday night. The legislation seeks to prohibit federal funding for certain Chinese biotech firms identified as “biotechnology companies of concern.” It also aims to restrict American investments in sensitive Chinese industries, as part of efforts to secure the US biotech supply chain.

However, it is important to note that the Biosecure Act is not yet law. The US House of Representatives and the Senate must agree on an identical version of the bill, which will then require the signature of President Donald Trump to be enacted.

Impact on Indian Pharma and CDMOs

Analysts believe that the move could significantly benefit Indian pharma companies. In the past, even the unapproved version of the Biosecure Act led to increased inquiries and project wins for Indian CDMOs, as global innovators looked to diversify their supply chains away from China.

Over the last 2–3 years, Indian pharma companies have already secured a number of manufacturing projects, and the approval of this Act may accelerate this trend.

Indian Companies Likely to Benefit

Brokerages and market experts suggest that the Indian CDMO companies that are likely to benefit from the move include Divi’s Laboratories, Jubilant Pharmova, Neuland Laboratories, Dr Reddy’s Laboratories and Biocon.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.