Sun Pharma, Dr Reddy’s, Cipla and Other Pharma Stocks in Focus After Trump’s Executive Order on Drug Pricing

On May 13, 2025, Indian pharmaceutical companies such as Sun Pharma, Dr. Reddy's Laboratories, Cipla, Biocon, and Aurobindo Pharma are likely to react to fresh developments coming from a new executive order signed by U.S. President Donald Trump. Pharma stocks ended in the red on May 12, underperforming the broader market, which closed firmly in positive territory. 

What Trump’s New Order Says? 

The order, issued late yesterday, calls on pharmaceutical companies to voluntarily reduce drug prices or face potential regulatory consequences. It introduces a framework that would allow U.S. patients to purchase medications at the “Most-Favoured-Nation” (MFN) pricing—essentially aligning U.S. drug costs with the lowest prices paid in other developed countries. 

Trump cited that U.S. drug prices are more than 3 times higher than those in other Organisation for Economic Co-operation and Development (OECD) nations, claiming that despite representing less than 5% of the global population, the U.S. accounts for roughly 75% of global pharmaceutical profits. The intent of the order is to close this disparity by reducing domestic prices and ending what the administration sees as America subsidising lower drug costs abroad. 

Rally in US Pharma Stocks 

Interestingly, U.S. pharmaceutical stocks rallied following the announcement, as the measures were perceived to be less severe than anticipated. The market had braced for sweeping, immediate price cuts, which the order stopped short of imposing. As a result, major pharma names such as Pfizer, Eli Lilly, Amgen, and Sanofi all closed higher in regular trading. 

For now, the order does not appear to directly impact the pricing of generic drugs, which dominate exports from India. However, uncertainty remains, as the executive order is a broad collection of drug pricing proposals that Trump has advocated for in the past. While it threatens to draw the pharmaceutical industry into negotiations, the specifics of compliance or potential penalties remain vague. 

Recovery in Nifty Pharma Index

On Monday, May 12, 2025, the Nifty Pharma index and most of its constituents recovered from the day’s lows despite opening lower. Although the index managed to close slightly higher, it still underperformed Monday’s robust broader market rally. 

Also Read: Sun Pharma, Biocon and Other Pharma Shares Tumble After Trump Targets Drug Pricing on Social Media 

Conclusion 

While the broader market reflected optimism, the pharma sector remained under pressure, weighed down by regulatory uncertainties stemming from the U.S. executive order on drug pricing. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.