Indian Pharma Stocks Dip as Trump Pushes Drug Price Reform
Shares of Indian pharmaceutical companies took a hit on Monday after U.S. President Donald Trump announced aggressive plans to slash prescription drug prices in the United States, sending ripples across global pharma markets.
The Nifty Pharma index fell 1.6%, underperforming the broader market, as 13 of the 20 listed pharma firms ended the day in the red. Sun Pharmaceutical Industries, the sector heavyweight, led the decline with a sharp drop of 4.6%, followed by notable losses in Lupin, Dr. Reddy's Laboratories, and Cipla.
Trumpās āMost Favored Nationā Strategy Shakes Global Pharma
President Trump revealed his intention to sign an executive order mandating a pricing model that aligns U.S. drug prices with those in economically comparable nations. This āmost favored nationā pricing rule would cap the price of prescription medications in the U.S. to the lowest rate available in any developed country.
āWe will ensure American patients no longer pay the highest prices in the world for the same drugs sold cheaper elsewhere,ā Trump said, emphasizing that the pricing overhaul could reduce U.S. drug costs by as much as 30%ā80%.
Indian Exporters Brace for Impact
India, one of the largest exporters of generic drugs to the U.S., is likely to feel the pinch if profit margins shrink under the revised pricing system. Indian drugmakers heavily rely on the U.S. market, which accounts for a substantial portion of their revenue.
āInvestors are reacting cautiously to the possible implications for Indian pharmaceutical exports,ā said a senior analyst at a Mumbai brokerage firm. āIf U.S. pricing reforms significantly cut reimbursement rates, generic manufacturers from India may have to renegotiate contracts or accept thinner margins.ā
Market Sentiment Mixed
While Indian benchmarks posted gains on Monday, with the Nifty 50 and Sensex closing slightly higher, the pharmaceutical sector was the clear laggard due to concerns over international regulatory risk.
Market participants now await further clarity on the executive orderās implementation timeline and whether it will face legal challenges from U.S.-based pharmaceutical lobbies or international trade partners.
