MUMBAI: Shares of Indian generic drug makers like Sun Pharmaceuticals Ltd, Glenmark Pharmaceuticals and Granules India came under intense pressure, ahead of US President Donald Trump’s long-awaited first speech to controlling prescription drug prices on Friday. The proposed speech is seen as Trump’s overarching plan to lower drug prices, increase competition, and address foreign governments paying lower prices for US drugs due to government controls.
The move could affect Indian pharma firms, which file the maximum number of generic drug approvals from the US FDA. On Friday, pharma shares slumped by up to six per cent, with Sun Pharmaceutical slipping six per cent to Rs 468 on BSE during afternoon trade, before it closed five per cent down on BSE. Likewise, both Glenmark Pharmaceuticals and Granules India too hit their respective 52- week lows on BSE, while other players like Novartis India, Marksans Pharma, Ajanta Pharma, Morepen Laboratories, Alkem Laboratories, Sun Pharma Advanced Research Company and Aarti Drugs were down between three and four per cent on Friday. The S&P BSE Healthcare index too was fell one per cent, while Nifty Pharma index plunged 1.5 per cent as against 0.5 per cent in the Sensex and Nifty.
As per estimates, the US accounts for over 70 per cent of the world’s branded drug profits, but unlike other countries, its government doesn’t regulate prices. Patents also last longer in the US than others, typically over 12 years, and branded drug firms increase prices every year in double-digits. They also block competitors from launching low cost generics. Critics say lack of transparency limits competition and drive prices higher, which the Trump administration wants to contain. Investors are also bracing for the possibility that Trump will diverge from the original plan and take more aggressive action, some of which could directly impact drug makers, who argue that high prices for prescription medicines are essential to fund Research and Development.