Following President Trump’s signing of an Executive Order to boost domestic drug production facilities, leading pharmaceutical exporters to the United States may risk commercial disruption, as reflected in share prices on 6 May.

In early trading, Sun Pharma’s shares fell more than 1.5% as the leading Sensex loss, Cipla’s shares fell more than 2%, Biocon‘s shares fell 0.3%, and Lupin’s shares fell more than 3% as the leading laggard on the BSE 100. Aurobindo Pharma was the biggest loser, down more than 3%, followed by Lupin and Cipla. The Nifty Pharma index was down 1.5% in early trading.

On 5 May, US President Trump signed an executive order to rebuild prescription drug manufacturing in the United States, with the goal of reducing reliance on foreign-made medicines. He also directed authorities to accelerate the construction of facilities to produce prescription drugs, active pharmaceutical ingredients (APIs), and other essential raw materials. The decision is considered a step toward lowering the US’s reliance on foreign medicines and increasing the home manufacture of essential pharmaceutical ingredients.

Sun Pharma’s US revenue during the March quarter totalled $474 million, accounting for more than 30% of the company’s total sales.  The company has been making attempts to mitigate the decline in generics sales by expanding its specialized business and even considering prospective acquisitions in this market.  Sun Pharma generated up to 72.7% of its total revenue from exports in FY24.

Other prominent US pharmaceutical exporters from India are Aurobindo Pharma, Dr Reddy’s Labs, Lupin, and Cipla.

The USFDA is expected to provide a report within 180 days of the directive, which will evaluate regulations and guidelines on domestic pharmaceutical manufacturing development. The Executive Order also outlines efforts to minimize ‘duplicative or superfluous requirements’ in regulations.

Within 90 days of receiving the order, the USFDA must strengthen its inspection procedures to ensure ‘regular reviews’ of overseas production sites that sell pharmaceuticals to the US. The decree suggests a higher fee for foreign industrial facilities.

The directive also proposes a centralized coordination of environmental permits needed to develop local pharmaceutical production capacity.

The Environmental Protection Agency (EPA) must also ensure that factories producing pharmaceutical goods, APIs, and other raw materials receive faster clearances.” Within 180 days of the date of this order, the Administrator of the Environmental Protection Agency (EPA) shall take action to update regulations and guidance that apply to the inspection and approval of new and expanded manufacturing capacity of pharmaceutical products, active pharmaceutical ingredients, key starting materials,” the Executive Order said.

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