BackIndian pharma stocks close lower on Donald Trump’s targeted attack
US President-elect Donald Trump attacked the pharmaceutical industry for high drug prices and for manufacturing overseas
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Mumbai: Shares of India pharmaceutical companies fell on Thursday as US President-elect Donald Trump’s strong remarks on high prices of medicines indicated tougher operating environment in the US, which is the largest market for Indian drug makers.
Shares of Sun Pharmaceutical Industries Ltd, Dr. Reddy’s Laboratories Ltd, Aurobindo Pharma Ltd, Lupin Ltd, Cipla Ltd, Cadila Healthcare Ltd, and Glenmark Pharmaceuticals Ltd were down in the range of 1-2% on the BSE, following the decline in pharma stocks in the US on Wednesday.
The pharma industry is “getting away with murder", Trump said on Wednesday in his first press conference since he was elected.
Trump attacked the pharmaceutical industry for high drug prices and for manufacturing overseas and said he will create new procedures for bidding on drugs for government programmes.
“Incremental impact on Indian pharma as a consequence of the measures mentioned by Donald Trump could be extremely limited," said an analyst, who did not wish to be named.
Indian generic drug companies are already facing pricing pressure in the US because of consolidation of distribution channel and rising competition and price erosion of 8-9% in base business has been factored in. “There is very little incremental risk to our high single digit price erosion assumptions," the analyst added.
Pharma companies had cheered Trump’s victory as the President of the US anticipating relatively lenient policies compared to Democratic candidate Hillary Clinton but the latest statements of Trump have come as a negative surprise.
“The comments indicate the US is becoming protectionist, which is hurting market sentiment," another analyst said.
Drug pricing has become a sensitive subject in the US in recent times with the government bearing down on pharmaceutical companies for increasing prices. While most of the clamour has been around increase in prices of branded products, generics have also come under scrutiny with the antitrust division of the US Department of Justice (DoJ) probing sharp increases in prices of certain generic products and the possibility of drug makers acting as a cartel.
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