Indian pharma stocks, like NIPHARM, dropped by 1.6% on Monday, despite the broader market going up. This happened after U.S. President Donald Trump announced plans to reduce the prices of prescription drugs by 30% to 80% to match the prices in other wealthy countries. Trump said he would sign an executive order to make this happen, though he didn’t provide many details on how it would work.
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The U.S. currently pays almost three times more for many prescription drugs than other countries. Many Indian pharmaceutical companies make a large part of their revenue by selling cheaper generic versions of popular drugs in the U.S. However, Trump’s price cuts could hurt these companies’ earnings.
Out of the 20 stocks on the Indian pharma sub-index, 13 fell. Sun Pharma saw the biggest drop, falling 4.6%. Other companies like Zydus Life and Cipla also dropped by 0.7% each. Divi’s Laboratories and Lupin fell by 2% each, and Biocon lost nearly 3%.
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Shrikant Akolkar, an analyst at Nuvama Institutional Equities, said that if drug prices are cut by 50% or more, it would have a big impact on the U.S. market, especially for branded drugs. This would also affect generic drugs over time by reducing the market size for new drugs. Indian companies like Sun Pharma, Biocon, and Zydus Life could be affected if these changes are strictly enforced.
The U.S. is a major market for Indian pharmaceutical companies, making up nearly a third of their exports. Last year, India’s pharma exports to the U.S. grew by 16%, reaching about $9 billion.
