Indian pharmaceutical companies are bracing for potential headwinds following a major announcement by former US President Donald Trump on his social media platform Truth Social. Trump declared that he plans to sign an executive order on Monday morning (US time) that will slash prescription drug prices by 30% to 80%, creating immediate ripples across global healthcare and pharmaceutical industries.

This move is especially significant for Indian pharma exporters, given that the United States is the largest market for Indian generic drugs. The Indian pharma sector, already under pressure due to regulatory scrutiny and rising competition, could see fresh volatility as investors and companies assess the implications of this policy.

What Did Trump Announce?

In his post, Trump stated that the US will adopt a 'Most Favoured Nation' (MFN) pricing policy, which means the country will pay the lowest drug prices available anywhere in the world. He claimed this would result in historic reductions in healthcare costs, bringing prices down to levels “never even thought of before.”

This is not the first time Trump has attempted such a policy. A similar executive order was issued during his first term in 2020, but was ultimately blocked by US courts. The latest iteration seems to revive that effort, albeit with more urgency and wider coverage.

Targeting Branded Drugs First

The primary target of the new executive order appears to be innovative and branded drugs, which often carry hefty price tags in the US. These drugs are generally developed by major pharmaceutical firms and protected by patents, limiting competition in the short term.

However, generic drugs, many of which are manufactured in India, could still be impacted. In scenarios where innovator drug prices fall, the ceiling for generic pricing during the period of limited market competition may also decline.

That said, generics typically cost 80% to 90% less than their branded counterparts, meaning their direct exposure may be somewhat limited. The extent of the impact, however, will largely depend on how the policy is structured and enforced.

India’s Generic Drug Dominance in the US

India supplies around 30% to 40% of all generic drugs sold in the US, making it the largest supplier to the American pharmaceutical market. Major Indian drugmakers such as Sun Pharma, Dr. Reddy’s, Cipla, Lupin, Aurobindo Pharma, and Zydus Lifesciences have substantial revenue exposure to the US.

With Trump's proposed changes, profit margins on these exports could tighten, especially if tariffs or pricing mandates are imposed simultaneously.

Trump Warns of High Tariffs

Adding another layer of complexity, Trump also hinted at potential new tariffs on pharmaceutical imports to the US. During earlier speeches and social media updates, he has signalled that tariffs on imported medicines will be introduced at unprecedented levels.

While further clarity on this issue is awaited, the prospect of tariffs could prove to be a significant concern for Indian pharmaceutical exporters. Tariffs would directly increase the cost of Indian-made drugs in the US market, impacting their competitiveness.

Why Indian Markets Are on Alert

The Nifty Pharma Index, which tracks leading Indian pharma companies, has remained largely flat over the past month, but is already down 10% in 2025. With Trump’s statement creating uncertainty, analysts expect volatility in the coming days as investors await the official language and structure of the executive order.

Stock-specific reactions could also play out based on the exposure of individual companies to the US market. Those with larger US revenue shares or high-end drug portfolios may be more vulnerable.

Industry Experts Weigh In

Pharmaceutical analysts are advising a wait-and-watch approach, stressing the need to examine the details of the executive order. Key questions include:

• Will the policy only cover Medicare drug purchases or apply across all US drug buyers?

• Will generic drugs be included, or only branded medications?

• What mechanisms will be used for international price benchmarking?

• How will pharma tariffs be structured?

Until these elements are clarified, Indian pharma companies may avoid major strategic shifts, but sentiment-driven stock reactions are almost certain.

Reactions from Indian Pharma Companies

While most Indian pharma companies have not officially commented yet, sources indicate that they are closely tracking developments. Several firms have internal task forces dedicated to policy monitoring in key export markets like the US, especially during election seasons.

Global Pharma Implications

If implemented, this policy could reshape global pharmaceutical pricing dynamics. Countries that currently pay lower prices for drugs due to government-negotiated contracts, such as Canada, Germany, and Australia, could see their own pricing leverage diminished as manufacturers attempt to raise prices there to maintain profitability globally.

This, in turn, could squeeze margins for pharma companies worldwide, including Indian manufacturers.

Looking Ahead

Trump’s executive order is expected to be signed Monday morning (Washington time). Once signed, it may take weeks or months to be fully implemented, especially if legal challenges emerge again.

In the meantime, Indian pharma companies will need to:

• Review their US portfolio pricing strategies

• Prepare for cost and tariff impact assessments

• Stay agile for supply chain or manufacturing adjustments

• Engage with regulatory and trade bodies for clarity and advocacy

Conclusion

Trump’s new executive order to bring massive reductions in drug prices through a “Most Favoured Nation” pricing policy and potential tariffs on imports poses a strategic and financial challenge to Indian pharmaceutical firms.

While generic drugs may be relatively insulated, the scale and intent of the policy signal a shift that could redefine international pharmaceutical trade. Investors, exporters, and policymakers will be watching closely as this story unfolds.

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