Cipla, Lupin, Aurobindo Shares Drop as Trump’s Push to Boost US Drug Mfg Sours Sentiment

Major pharma stocks, including Cipla, Lupin and Aurobindo, witnessed a sharp plunge on Tuesday after Trump signed new executive orders to fasten up the process of setting up domestic manufacturing plants. The Nifty Pharma index plunged by nearly a per cent or more than 180 points.

The US President has reportedly signed fresh executive orders aimed at reducing the time required to approve setting up pharmaceutical plants in the US. As per a report by Reuters, the latest order is part of the new regulations to encourage domestic manufacturing in the nation.

At 12:15 pm, Cipla shares were trading at Rs 1,512.20 price level, down by nearly 2% on the National Stock Exchange. Other major pharma firms, including Lupin and Aurobindo, followed suit and decline by around 1.84% and 2.10% on the exchange, respectively.

“We don’t want to be buying our pharmaceuticals from other countries because if we’re in a war, we’re in a problem, we want to be able to make our own,” Trump said in the fact sheet. “As we invest in the future, we will permanently bring our medical supply chains back home. We will produce our medical supplies, pharmaceuticals, and treatments right here in the United States," POTUS added.

Pharma Stocks no Longer Shining?

Last month, when Trump had initially announced the imposition of reciprocal tariffs on imports, Pharma sector fared relatively better. This was largely because pharmaceutical products were partially exempted from the tariff ambit. At least, that's what investors thought.

However, the optimism has now faded with Trump's latest executive order.

As per the fact sheet released by the White House, the new order will speed up timelines for "building domestic pharmaceutical manufacturing site by reducing regulatory barriers to construction."

Estimates, cited in the fact sheet, suggest that building new manufacturing capacity in the country, for pharma and critical inputs might take as long as five to ten years, "which is unacceptable from a national-security standpoint."

So far this year, the Nifty Pharma index has plunged by over 1,800 points or more than 7%. The broader Nifty50 index, on the order hand, manged to stay afloat with gains of around 650 points or almost 3% during the same period.