The Nifty Pharma index recovered from early losses on Monday after U.S. President Donald Trump unveiled a sweeping plan to cut domestic drug prices by 30% to 80%. The policy, announced via Truth Social, aims to bring U.S. drug prices in line with global standards and reduce what Trump called an “unfair burden” on American consumers.
Indian Pharma Stocks Show Resilience
While the announcement sparked initial panic, the Nifty Pharma index rebounded to close 0.15% higher at 21,102.70. Stocks like Mankind Pharma, Natco Pharma, and Granules India were among the top gainers, rising up to 4.8%.
Trump criticized pharmaceutical companies for blaming high U.S. prices on research and development costs, saying: “It was always difficult to explain and very embarrassing… the ‘suckers’ of America paid for everything.”
India’s Export Surge Amid Trade Realignment
Asian Drugmakers Take a Hit
In contrast, shares of Japanese and South Korean pharmaceutical giants took a beating. Chugai Pharmaceutical plummeted 7.2%—its worst in a month. Daiichi Sankyo and Takeda Pharmaceutical fell around 5%, while SK Biopharmaceuticals, Celltrion, and Samsung Biologics dropped over 3% in Seoul trading.
Why India May Be Less Affected
According to Vinit Gala, Founder of Xylem PMS, the sharp price cuts are largely rhetoric. He noted that U.S. FDA compliance and approval costs are significantly higher, making complete parity with global prices unlikely.
“Indian generic players are somewhat insulated. Unlike Korean players, who focus on patented biologics, Indian companies produce generics, which already bring down prices drastically once a molecule is off-patent,” Gala said.
Trump’s Broader Pharma Strategy
This isn’t Trump’s first move in reshaping U.S. pharma policy. On May 5, he signed two executive orders:
- Promoting domestic drug production and easing regulations
- Limiting federal research funding to projects with biosecurity risks
These measures aim to reduce dependency on foreign Active Pharmaceutical Ingredients (APIs) and bolster U.S.-based manufacturing, citing national security concerns. To learn more about how U.S. trade policies are shifting, visit our detailed post on U.S. Trade Policy Shifts: What You Need to Know.
Brokerages Remain Cautious
Nuvama Institutional Equities warned that the policy, if fully enforced, could raise compliance and operational costs for foreign manufacturers, including Indian firms. They added, “Generic pharma may underperform due to ongoing uncertainty.”
Conclusion: Opportunity or Risk?
Trump’s aggressive drug pricing reforms have jolted the pharmaceutical sector globally. While Indian pharma stocks showed resilience, the policy’s long-term implementation remains uncertain. Analysts expect further volatility as market players digest the potential impact on pricing, regulation, and supply chains.