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Shares of contract drug manufacturing organizations, including Divi's Labs, Neuland Labs, and Piramal Pharma, faced significant declines as uncertainty surrounding the US Biosecure Act intensified. The act's exclusion from a key defense bill suggests a softening US stance on Chinese biotech, negatively impacting sentiment towards Indian CDMO players. Neuland Laboratories experienced a 9% drop, marking its largest single-day decline in over seven months, while other companies saw declines of up to 5%.
After a significant sell-off, the markets have shown signs of recovery, with the Sensex and Nifty rallying for five consecutive sessions. However, concerns remain as valuations are still high, and analysts predict muted returns for 2025, citing weak foreign institutional investor flows and a deceleration in growth momentum across sectors.
Indian equity markets rebounded on December 5, with the Sensex rising 809.53 points to 81,765.86 and the Nifty up 240.95 points to 24,708.40, driven by strong FII inflows and positive global sentiment following comments from US Federal Reserve Chairman Jerome Powell.Central Depository Services (CDSL) shares hit an all-time high, gaining 8%, while the Nifty IT index rose 2% amid optimism for US tech stocks. In contrast, Genus Power fell 5% after a search by enforcement officials, and Divi's Laboratories dropped 3% due to patent issues affecting a key drug.
Divi's Laboratories Ltd's shares fell nearly 3% on December 5, trading at Rs 6,078.6, after a US court ruled that Novartis could not block MSN Pharmaceuticals from launching a generic version of its heart drug, Entresto. The court upheld a previous decision that Novartis was unlikely to win a patent lawsuit against MSN, paving the way for the first US generic of the drug. Divi's Labs has a contract with Novartis for the drug, and its market capitalization stands at Rs 1.6 lakh crore.
On November 29, the Nifty and Sensex rebounded strongly, with the Sensex rising 759 points to 79,803 and the Nifty gaining 217 points to 24,131, driven by gains in pharma, infrastructure, energy, and auto stocks. Zee Entertainment shares surged 5% after shareholders rejected CEO Punit Goenka's reappointment, while Divi's Laboratories rose 4% following a bullish report from Citi. Adani Group stocks jumped up to 20% after being included in the NSE's F&O segment, and Easy Trip Planners saw a 10% increase after announcing a 1:1 bonus share issue. Conversely, CreditAccess Grameen fell 8.5% after a downgrade from Goldman Sachs, which revised its target price significantly lower.
Divi's Laboratories has been named Citi's top pick in the Indian pharma sector, with a price target of Rs 6,850, indicating a potential upside of 15%. The company's shares have surged over 52% year-to-date, bolstered by a favorable US court ruling regarding a generic version of Novartis' heart failure drug, Entresto, which could have impacted Divi's sales. The CDMO contract with Novartis accounts for approximately 8% of Divi's total sales for FY24.
DIVI'S LABORATORIES LTD
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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