Pharma Stocks Fall After U.S. Drug Price Reduction Plans
Indian pharmaceutical stocks saw a significant dip on May 12, 2025, following the announcement by U.S. President Donald Trump regarding plans to reduce prescription drug prices by up to 80%. The executive order, which introduces a “most favored nation” approach, aims to ensure the U.S. will not pay more for drugs than the lowest price paid by other countries. This move has led to concerns within the global pharma market, particularly affecting Indian companies with large stakes in the U.S. pharmaceutical market.
Impact on Indian Pharma Companies
Indian pharmaceutical stocks took a hit, as many of these companies rely heavily on U.S. sales for their revenue. Shares of key players such as Sun Pharmaceutical Industries Ltd. dropped 7%, while Lupin Ltd. and Aurobindo Pharma Ltd. saw declines of around 3%. The Nifty Pharma index also fell by 2.3%, reflecting the broader impact on India’s pharmaceutical sector.
Global Pharma Market Response
The U.S. move also rattled global pharmaceutical markets. Major American drug manufacturers such as AbbVie, Amgen, Pfizer, Eli Lilly, and Merck reported declines in premarket trading, falling between 2.1% and 3.6%. In Europe, companies like AstraZeneca, GSK, and Roche saw their shares drop by 3.3% to 6.8%, and pharmaceutical stocks across Asia and Australia followed a similar downward trend.
Also Read: India–UK Free Trade Agreement Finalized: A Game-Changer for Bilateral Trade
Uncertainties Over Implementation
While the U.S. executive order is expected to be signed shortly, there is still much uncertainty surrounding its specifics. Questions remain regarding whether it will affect government-run health programs like Medicare and Medicaid, and how it will influence pricing for different types of drugs, including generics and specialty medications.
Outlook
The announcement has introduced a layer of uncertainty in the pharmaceutical industry, especially for Indian companies with heavy exposure to the U.S. market. Investors are closely watching how the situation develops and its potential long-term effects on both Indian and global pharmaceutical markets.
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