R. Suryamurthy
US President Donald Trump’s announcement of a sweeping executive order to slash prescription drug prices by 30-80% has sent shockwaves through the Indian pharmaceutical sector, a major exporter to the United States. Indian pharma stocks witnessed a sharp decline on Monday, bucking broader market trends, as investors grappled with the potential impact of the move.
The announcement, made via Trump’s Truth Social platform, lacked specific details, leaving Indian drugmakers and analysts in a state of anxious anticipation. The US, a crucial market for Indian pharma, accounts for a substantial portion of revenue for companies like Sun Pharma, Cipla, Dr. Reddy’s, and Lupin, with some reporting up to 47% of their sales from the region.
The core concern revolves around the potential erosion of the competitive pricing advantage that Indian firms rely on. If US-based companies are forced to drastically reduce prices, Indian generics, which thrive on cost-effectiveness, could face significant challenges.
“We don’t know the details yet—whether it’s linked to international reference pricing or if generics will also fall under its scope, there’s a lot that is still unclear,” stated Tushar Manudhane, a pharma analyst at Motilal Oswal Financial Services, highlighting the prevailing uncertainty.
The pharma sub-index on Indian stock exchanges fell by 1.6%, with Sun Pharma leading the decline, down 4.6%. Other major players like Zydus Life, Cipla, Biocon, and Lupin also experienced significant drops.
Analysts believe that companies with a strong presence in the branded generics and speciality drug segments, such as Sun Pharma and Biocon, are particularly vulnerable. Sun Pharma’s focus on branded speciality drugs, including its dermatology drug Leqselvi, and Biocon’s exposure to biosimilars, place them at higher risk.
“A price cut of prescription drugs by 50% or more would hurt the U.S. formulations market, more on the branded size due to immediate potential impact, while over the medium term it will also impact generics as it reduces the potential market size of new drugs,” said Shrikant Akolkar, an analyst at Nuvama Institutional Equities.
However, companies focused on over-the-counter (OTC) generics, like Dr. Reddy’s Laboratories, Marksans Pharma, and Granules Pharma, are expected to be less affected.
Adding to the complexity, experts are warning that Trump’s move could trigger a global price recalibration, potentially leading to increased pressure on India to tighten its patent laws through trade negotiations. Ajay Srivastava of GTRI stated that Trump’s Drug Order Is a Wake-Up Call for India’s Pharma Policy.
India’s patent system, which prioritises public health and affordability, has long resisted “TRIPS-plus” provisions favoured by developed countries. However, recent developments, such as concessions made in the India-UK Free Trade Agreement, have raised concerns about potential future pressures.
“India must treat this moment as a strategic inflexion point,” Srivastava emphasised. “The India–UK FTA should not become a template for future concessions. As global pharmaceutical firms turn to FTAs to extract TRIPS-plus commitments, India must hold the line on its patent regime—one that enables affordable access, prevents monopolistic extensions, and safeguards public health.”
As the Indian pharma sector awaits further clarity on Trump’s executive order, investors are shifting their focus towards companies with a strong domestic presence. The long-term impact of the US price cuts remains uncertain, but the development has undoubtedly triggered a period of strategic reassessment for India’s “pharmacy of the world”