HONG KONG, CHINA (CP) – Indian pharmaceutical stocks fell 1.6% on Monday as investors reacted to President Donald Trump’s announcement that he would sign an executive order to slash U.S. prescription drug prices by 30-80%, potentially impacting Indian drugmakers who earn significant revenue from selling generic medications to the American market.
Trump revealed plans to implement “most favored nation” pricing that would match U.S. drug costs with those of other wealthy countries, addressing a disparity that currently sees Americans paying nearly three times more for many medications. The announcement sent ripples through India’s pharmaceutical sector even as the broader Nifty 50 index gained 2.5%. Thirteen of 20 stocks on India’s pharma sub-index declined, with industry leader Sun Pharma dropping 4.6% while Divi’s Laboratories and Lupin fell 2% each, and Biocon lost nearly 3%.
“A price cut of prescription drugs by 50% or more would hurt the U.S. formulations market, more on the branded size due to immediate potential impact, while over the medium term it will also impact generics as it reduces the potential market size of new drugs,” explained Shrikant Akolkar, an analyst at Nuvama Institutional Equities. The impact could be particularly severe for “Indian branded players like Sun Pharma, Biocon and Zydus Life” upon strict implementation of the policy, Akolkar added.
The United States represents nearly a third of India’s pharmaceutical exports, which increased 16% to approximately $9 billion in the last fiscal year according to government-backed trade body Pharmexcil. While Trump’s executive order aims to bring relief to American consumers facing high medication costs, the president has not yet provided specific details on how the price reductions would be implemented or enforced. The announcement comes as part of broader Trump administration efforts to address healthcare costs, which have been a key political issue since his return to office in January.