Big Red for Indian Pharma Stocks post Trump's US-Centric Pharma Order
Pharmaceutical shares experiencing decline today, fueled by Trump's executive orders resulting in market panic.
With fresh trades coming in, the pharmaceutical sector is turning a deep shade of red. The Nifty Pharma Index is taking a hit, reaching over 1% down, and the BSE Healthcare Index is no exception, remaining under close watch. Stocks severely affected in this sea of red include pharma giants like Cipla, Dr Reddy's, and more. This troublesome trend has been triggered by new executive orders signed by US President Donald Trump geared towards promoting and speeding up the domestic development of pharmaceutical facilities within the United States.
What's Brewing in Trump's Executive Orders?
As per recent Reuters reports, the U.S. President has taken an action to streamline the process of approving the creation of pharmaceutical plants in the U.S. This forms part of a broader regulatory strategy to drive domestic manufacturing.
In detail, these orders also include directives for the U.S. Health Regulator to strengthen the enforcement of active-ingredient source reporting among foreign producers, and may even consider making a public list of facilities that do not comply with regulations.
Who's in the Books?
According to Nomura's pharma predictions, top contenders include Dr. Reddy's, Cipla, Lupin, and Zydus.
How Will India’s Pharma Industry Respond?
Aditya Khemka, a leading pharma and healthcare analyst at InCred Asset Management, expressed that Indian pharmaceutical companies may not face an immediate impact in terms of business. However, over the long term, they might feel compelled to establish some capacities in the U.S., which would lead to increased costs and margin pressures.
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), echoed this sentiment, expressing that the Indian pharma industry is unlikely to face any instant impact.
The Affordable Picks
Industry analysts express some apprehension regarding the executive order, stating that it's essentially designed to encourage investments in the U.S. and to ensure faster approvals and a smoother business environment. This would be advantageous for those pharmaceutical companies that wish to establish a presence in the U.S. On the topic of regulatory oversight, many stakeholders express confidence, citing that leading pharma companies already conform to U.S. FDA requirements, making any potential efforts to increase inspections of overseas facilities less of a concern.
In the grand scheme, Trump's latest move could impose long-term challenges for India’s export-driven pharmaceutical sector, with increased costs, potential supply chain shifts, and tariff risks looming on the horizon. Indian manufacturers need to brace themselves for these challenges and reevaluate their long-term strategies to weather the storm.
[1] https://www.bloombergquint.com/putting-indian-pharma-in-perspective[2] https://theprint.in/opinion/trump-overhauling-regulatory-framework-is-not-phase-3a-of-us-pharma-war-on-india/825217/[3] https://www.livemint.com/news/india/india-s-pharma-companies-among-most-exposed-to-tariff-risks-report-1589206816887.html[4] https://www.fda.gov/media/142538/download[5] https://www.bloombergquint.com/politics/trump-administration-fda-plan-could-hit-india-s-drug-exports-report[6] https://timesofindia.indiatimes.com/business/india-business/trump-s-new-order-may-push-pharma-firms-to-establish-capacities-in-us/articleshow/91092893.cms
- In light of Trump's US-Centric Pharma Order, the pharmaceutical sector in India is experiencing a selloff, with the Nifty Pharma Index and BSE Healthcare Index plummeting.
- Stocks severely affected include major pharmaceutical companies like Cipla, Dr Reddy's, and others.
- Trump's executive orders aim to streamline the approval process for pharmaceutical plants in the US, as part of a broader regulatory strategy to drive domestic manufacturing.
- The orders include directives for the US Health Regulator to strengthen the enforcement of active-ingredient source reporting among foreign producers.
- Top contenders for potential impacts from these orders, according to Nomura's pharma predictions, include Dr. Reddy's, Cipla, Lupin, and Zydus.
- Over the long term, Indian pharmaceutical companies might face increased costs and margin pressures due to the need to establish some capacities in the US, as a way to cope with the potential oversight and possible supply chain shifts.
