U.S. Policy Shift Sends Shockwaves Through Indian Pharma Stocks
Indian pharmaceutical stocks faced significant selling pressure on May 9 following U.S. President Donald Trump’s announcement of a major push to reduce the prices of prescription drugs in the U.S. by up to 80%. The move, which is part of a broader effort to make pharmaceuticals more affordable for American consumers, sent shockwaves through the Indian pharma sector, which relies heavily on exports of generic drugs to the U.S.
The Nifty Pharma index saw a sharp decline of 1.7% in early trading, with some of the largest pharmaceutical companies in India—Sun Pharmaceuticals, Biocon, Lupin, and Aurobindo Pharma—witnessing losses of up to 5%. The global generic drug pricing strategy outlined by Trump is expected to impact the revenue of Indian manufacturers who supply the U.S. with generic versions of patented drugs. The immediate reaction in the Indian stock market reflected a sense of uncertainty regarding future earnings growth for the sector.
Highlights:
Nifty Pharma down 1.7% as Trump’s pricing plan impacts sentiment.
Top pharma stocks such as Sun Pharma, Biocon, Lupin, and Aurobindo Pharma fall up to 5%.
India’s generic pharma exporters to the U.S. expected to face significant revenue pressures.
Trump’s Plan to Lower U.S. Drug Prices by 30-80% Raises Concerns
President Trump, in a post on the social media platform Truth Social, criticized the high costs of prescription drugs in the U.S., pointing out that drugs often cost five to ten times more in the U.S. than in other countries, even when manufactured by the same companies. He blamed pharmaceutical companies for shifting the burden of research and development costs onto American consumers, which has long been a contentious issue in the industry.
Trump’s announcement of the plan to lower U.S. drug prices by as much as 80% was met with sharp reactions from investors, especially those holding stocks in companies with significant exposure to the U.S. generics market. The U.S. pharmaceutical market is a crucial revenue stream for many Indian pharma companies, and any disruption to that flow, particularly through price reductions, could lead to substantial margin compression.
Highlights:
Trump targets U.S. drug prices, aiming to reduce costs by 30-80%.
U.S. pharmaceutical market seen as a key revenue source for Indian generics exporters.
Price cuts could lead to margin compression for Indian pharma companies.
Regulatory Pushes for U.S. Domestic Manufacturing May Reshape Global Supply Chains
This push to lower drug prices follows two executive orders signed by Trump on May 5, 2025, aimed at reshoring pharmaceutical manufacturing back to the U.S. The first order focuses on easing regulations for domestic drug production and prioritizing U.S. supply chains, while the second addresses biosecurity risks and limits funding for certain virus research.
The orders are part of a broader effort to reduce the U.S.’s reliance on foreign suppliers for key pharmaceutical ingredients and manufacturing. Specifically, the U.S. aims to boost domestic production of Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs), which are critical components in the manufacturing of generic drugs.
According to Nuvama Institutional Equities, if fully implemented, these policy changes could increase compliance costs for foreign manufacturers, including those in India. Generic pharmaceutical manufacturers are likely to be most affected by the reshoring efforts, with the potential for a restructured supply chain that favors domestic U.S. production over foreign imports.
Highlights:
Trump’s executive orders aim to boost U.S. domestic drug manufacturing.
Focus on reshoring production of APIs and KSMs, potentially impacting foreign suppliers.
Indian generics manufacturers face heightened compliance costs and risks to their U.S. market share.
Uncertainty Looms for Indian Generic Drug Manufacturers
With the U.S. government prioritizing the reshoring of pharmaceutical manufacturing, particularly the production of APIs and KSMs, Indian pharmaceutical companies that rely on the export of generic drugs to the U.S. could face increased operational and compliance costs. Nuvama Institutional Equities suggested that these new policies may underperform for the sector, leading to an uncertain outlook for Indian generics exporters.
Given the volatility surrounding U.S. policy changes and the broader regulatory landscape, analysts expect Indian pharma stocks to continue to underperform in the near term. This is particularly concerning for companies whose revenue is heavily dependent on the U.S. generics market, which may face increased competition from domestic U.S. manufacturers in the coming years.
Highlights:
Compliance and operational costs may rise for Indian pharma exporters.
Uncertainty in the U.S. regulatory environment creates a negative outlook for Indian generics manufacturers.
Indian pharma stocks expected to underperform as U.S. reshoring efforts gain momentum.
