Last Updated: September 10, 2024, 13:34 IST
GST Rate Cut On Cancer Drugs (Getty image for representational purpose)
Previously, the government had scrapped the basic 10 per cent customs duty on these three cancer drugs in the Union Budget
Shares of Pharma companies manufacturing anti-cancer drugs rallied up to 4.4 per cent as Finance Minister Nirmala Sitharaman in the 54th GST council meeting announced that the Goods and Services Tax (GST) on cancer drugs will be reduced to 5 per cent from an earlier 12 per cent.
This tax cut, aimed at reducing the cost of cancer treatment in the country will see prices reduce for cancer drugs Trastuzumab Deruxtecan, Osimertinib and Durvalumab.
Previously, the government had scrapped the basic 10 per cent customs duty on these three cancer drugs in the Union Budget of 2024. One key beneficiary of these tax cuts is Astra Zeneca, as it is the major manufacturer of these drugs in India, making 62 per cent of sales from oncology drugs.
In reaction to the update, pharma stocks like Astrazeneca Pharma surged 4.4 per cent to its day’s high of Rs 7,069 on BSE while Fortis Healthcare shares went up by 3 per cent to Rs 563.55 and those of Natco Pharma shot up 2.5 per cent to Rs 1,585.
On a year-to-date basis, the shares of Astrazeneca and Natco Pharma have increased by 58.5 per cent and 78.7 per cent respectively, while the shares of Fortis Healthcare have gained 65 per cent in the same time period.
In addition, the US government also passed the draft of the Biosecure Act that prohibits the US 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 Organisation (CDMO) space being diverted to Indian companies, lifting shares of Divi’s Labs, Suven Pharma and Piramal Pharma over 3 per cent higher.
Infact, shares of several pharma companies–Suven Pharma, Ajanta Pharma, Divi’s Laboratories, Laurus Labs and Syngene International also surged to their highest levels in 52-weeks.
Brokerage InCred Equities highlighted that low manufacturing prices, foreign direct investments, and government incentives such as the Production-Linked Incentive (PLI) plan have turned India into an appealing CDMO destination for businesses looking for alternatives that are cheaper than China.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
