Pharmaceutical stocks are in focus yet again today after US President Donald Trump said that he will be coming up with a policy to reduce the cost of prescription and pharmaceutical drugs by 30-80%. At 0939 IST, the Nifty Pharma index was 1.6% lower, and was the only sectoral index apart from Nifty Healthcare that was in red during the early trade today. More than half of the stocks in the index were trading lower.
Pharma Stocks Dip as Trump Vows to Slash Drug Prices by 30-80%
Indian pharmaceutical stocks hit hard after US President Donald Trump announced plans to sign an executive order reducing prescription drug prices by 30–80%, a move that could significantly impact the pricing dynamics
US to come up with policy to reduce pharmaceutical drugs prices
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On his Truth Social platform, Trump wrote, “I am pleased to announce that tomorrow morning, in the White House, at 9:00 A.M., I will be signing one of the most consequential Executive Orders in our Country’s history. Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%. They will rise throughout the World in order to equalise…”
The announcement has drawn widespread attention as it could significantly affect and change the pricing dynamics for the Indian pharmaceutical companies, such as Sun Pharma, Lupin, Cipla, among others, who derive a large portion of their revenue from the US market. This could also have a potential impact on their profit margins. Sun Pharma, Biocon, Lupin, Aurobindo Pharma, Divi’s Laboratories and Glenmark were down 2-5% at 0939 IST.
About 32% of the total revenue of Sun Pharma for the December quarter came from its US business and this share was even larger for Lupin, which derived 38% of revenue from North America. Cipla, on the other hand, derived 27% of its revenue for the December quarter from North American market.
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Trump said he will formulate a ‘Most favoured nation’s policy’ under which the US will pay the same price as the country that pays the lowest price anywhere in the world. The US has been burdened with high prices of the drugs, he said, adding that “We are going to do the right thing….. Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before.”
It is not the first time Trump has had high drug costs in his sights as he proposed a similar plan during his first term, which aimed at capping Medicare drug prices, Bloomberg cited Stephen Barker, an equities analyst at Jefferies Japan, as saying. However, the effort was struck down in federal court after drug companies challenged it.
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