Shares of prominent pharmaceutical companies fell substantially as investors assessed the impact of US President Trump’s letter to 17 global drug majors requesting that they drop drug prices in the US and bring them in line with what other countries pay for new medicines.

The Nifty Pharma index plummeted over 2.4% for the third day, with Sun Pharma leading the way with a 3.8% drop, followed by Aurobindo Pharma, Gland Pharma, Cipla, Granules India, and Lupin, all down more than 2%-3%.  

Aurobindo Pharma shares have fallen the most in 17 weeks. Sun Pharma earns up to 20% of its income from pharmaceuticals sold in the United States. Sun Pharma’s shares were the worst affected on the Nifty 50 following the quarterly earnings.  

Trump’s letters to 17 of the world’s largest pharmaceutical corporations urged that companies should immediately decrease prices for existing treatments and provide guarantees that future medicines will be priced competitively with those in other nations.  The letters were addressed to Eli Lilly, Novo Nordisk, Pfizer, and others, and demanded that Most Favoured Nation (MFN) prices be introduced within 60 days.

During a briefing, White House Press Secretary Karoline Leavitt said, “According to recent data, the prices that Americans have been paying for brand name drugs are more than three times the price of other similarly developed nations pay. The president is determined to solve this problem and took further action today. He has signed 17 letters to pharmaceutical companies’ CEOs.”

In the letter, Trump gave a 60-day deadline for firms to voluntarily comply with the new pricing diktat, failing which the US will use ‘every tool in our arsenal’ to protect Americans from ‘continued abusive drug pricing’ practices. According to Trump’s letter, companies will be required to offer certain medicines directly to patients at the same cost that they are supplied to third-party insurance.

There is also the looming threat of a pharmaceutical tariff policy, as suggested by the US President recently. Earlier, on 29 July, US Commerce Secretary Howard Lutnick stated in an interview that President Trump will issue a pharmaceutical policy in the next two weeks, including the possibility of greater tariffs on pharmaceutical corporations. 

Lutnick added, “Basically, if you are not building your plant in America where we pay for pharmaceuticals, you are going to pay a massive tariff, because why should we pay for your drugs? And you make them overseas and you make your money overseas? At least if we’re going to pay for your drugs, you’re going to build them in America.” 

Through the plan, Trump hopes that US pharma manufacturers will use additional money from abroad to help American patients and taxpayers by providing direct access to medicines at MFN prices.

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