Indian Pharma Stocks Rally as U.S. Senate Passes Biosecure Act Targeting Chinese Biotech Firms

Indian pharmaceutical and contract development and manufacturing organisation (CDMO) stocks witnessed strong gains on October 10 after the U.S. Senate passed the Biosecure Act, a move expected to benefit Indian drug manufacturers. The legislation, embedded within the National Defence Authorisation Act (NDAA), restricts U.S. federal agencies from using or procuring biotechnology products and services from companies originating in China.

Pharma Shares Rise to 5%

The Biosecure Act received 77 votes in favour and 20 against in the U.S. Senate, signalling broad bipartisan support for tighter biotech security. Following the announcement, the Nifty Pharma index rose 1.29% by 15:30 pm, led by notable gains in key players such as Divi’s Laboratories, Piramal Pharma, and Wockhardt Pharma, which advanced by 5.59%, 2.03%, and 1.35%, respectively. Laurus Labs, Syngene, Jubilant Pharmova, and Neuland Labs also traded higher on expectations of increased global opportunities for Indian CDMOs.

Act to Curb Chinese Biotech Dependency

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The Biosecure Act, now part of the NDAA, is designed to reduce U.S. dependence on biotechnology equipment and services sourced from Chinese companies deemed as “entities of concern.” The restriction covers procurement, contracting, and usage by U.S. government agencies. This move comes amid heightened scrutiny over data security and supply chain resilience in critical industries like pharmaceuticals and biotechnology.

Brokerage reports cited by CNBC-Awaaz suggest that Indian firms with strong regulatory track records and manufacturing infrastructure could emerge as key beneficiaries of this policy shift. Divi’s Laboratories, Syngene, and Jubilant Pharmova — with their established USFDA-approved facilities — are well-positioned to capture additional outsourcing and contract manufacturing business from American companies seeking to reduce exposure to China.

India’s Expanding Role in Global Pharma Supply Chain

India already holds the distinction of having the highest number of USFDA-approved pharmaceutical plants outside the United States. According to Bajaj Finserv, India’s pharmaceutical exports to the U.S. have surged from $6 million in 2000 to $11 billion in 2023. The firm noted that India’s cost efficiency, skilled workforce, and growing infrastructure mirror the conditions that once helped China dominate the contract research and manufacturing services (CRAMS) market.

Bajaj Finserv added that the new legislation is likely to accelerate growth for Indian CRAMS players over the next decade. The Biosecure Act includes an eight-year “grandfathering clause,” allowing U.S. companies until 2032 to transition away from Chinese biotech suppliers — providing Indian firms sufficient time to build capacity and strengthen partnerships with global innovators.

Conclusion

The Biosecure Act's approval is a turning point in the history of the pharmaceutical industry worldwide. The U.S. has created a window of opportunity for India's rapidly expanding CDMO and CRAMS sectors by lowering dependency on Chinese biotech companies. Indian pharmaceutical companies are well-positioned to contribute more to global biotech supply chains in the next ten years thanks to their robust regulatory compliance, affordable prices, and growing skills.