Trump's Drug Price Slash Could Sting Indian Pharma

Up to 80% US price cuts may squeeze margins, push up innovator drug costs

- SOHINI DAS

U.S. President Donald Trump signing an executive order (EO) to bring the prices of prescription drugs in America in line with those paid by comparable nations is likely to have a two-pronged impact on India. First, multinational firms may look to raise drug prices in other markets, including India, thereby affecting Indian patients. Second, Indian drug exporters are expected to face pricing pressure in the US in the medium term.

On May 11, Trump announced plans to sign what he called "the most consequential EO in US history," aiming to reduce prescription drug and pharmaceutical (pharma) prices in the US by 30-80 percent with near-immediate effect. Reacting to the news, Nifty Pharma fell in early trade, even as the broader market cheered the India-Pakistan 'understanding'. It recovered during the day and ended marginally up, but several pharma stocks, including Sun Pharmaceutical Industries, Glenmark, and Ajanta Pharma, fell on the bourses.

Monday's EO directed the US Trade Representative and the Secretary of Commerce to act against foreign countries that purposefully and unfairly undercut market prices, driving price hikes in the US.