Pharma Stocks Rally After Trump’s Softer-Than-Expected Drug Pricing Order

Pharma stocks in India witnessed a sharp uptick on May 13, following a relief rally after former U.S. President Donald Trump’s executive order on drug pricing turned out to be less severe than initially feared.

While the broader market was under pressure — with benchmark indices trading nearly 1% lower — the Nifty Pharma index defied the trend and was trading 1.3% higher. This surge came on the back of global cues as investors responded positively to Trump’s latest comments on reducing drug prices.

Trump’s Drug Pricing Order Brings Relief to Global Pharma Industry

On May 12, Donald Trump announced a significant policy move aimed at cutting domestic drug prices in the U.S. He proposed reductions ranging between 30% to 80%, and later clarified that a 59% cut would be pursued under the executive order.

He emphasized this policy on his social media platform, writing in capital letters: “DRUG PRICES TO BE CUT BY 59%”. The executive order is based on the “most favored nation” pricing model, also known as international reference pricing. This means the U.S. would aim to pay prices similar to what other developed nations pay for the same medications.

Despite the aggressive language, analysts pointed out that the final version of the executive order was far more diluted compared to Trump’s earlier 2020 proposals. According to a note by Macquarie Capital (as reported by CNBC-TV18), this reduced intensity came as a relief for investors who were bracing for a much harsher clampdown on pricing.

Top Pharma Gainers on May 13

The positive sentiment lifted several Indian pharma stocks:

• Granules India emerged as the top gainer, rallying 4% to trade at ₹479 per share.

• Aurobindo Pharma climbed 3.4% to ₹1,247 apiece.

• Glenmark Pharmaceuticals saw a 3% rise, trading at ₹1,423.

• Dr. Reddy’s Laboratories was up 2%, quoted at ₹1,220.

• Sun Pharma saw a modest gain of 0.64% during the same time.

Investors responded positively to the softened stance, interpreting it as a signal that Indian drug exporters — many of whom rely on the U.S. for a significant share of revenues — would not face the kind of pricing pressure they feared.

Global Drugmakers Also Rebound

The impact of this development wasn’t limited to Indian markets. Major U.S. pharma companies also staged a strong recovery after an initial dip in premarket trading:

• Merck & Co surged 5.8%

• Pfizer gained 3.6%

• Gilead Sciences jumped 7.1%

• Eli Lilly, the largest drugmaker by market cap, rose 2.9%

This global rally indicates a broad consensus among investors that Trump’s order, while impactful, does not pose an immediate threat to the profitability of drug manufacturers.

What This Means for Pharma Stocks

The reaction from the stock market clearly shows that investors were bracing for worse. The softer execution of the “most favored nation” pricing model has offered temporary relief to pharma companies with U.S. exposure — particularly Indian exporters who count on America as a major market.

With pharma stocks outperforming even in a falling market, it’s clear that this sector remains resilient and continues to attract investor interest, especially during times of global policy shifts.