Cipla, Aurobindo Pharma, Lupin: Pharma stocks slide after Trump signs this executive order; NIFTY PHARMA index down 1%

Shares of pharma companies tumbled almost 3% on Tuesday, May 6, as investors became jittery after Donald Trump signed an executive order to reduce the time it takes to approve pharmaceutical plants in the US.

This was a part of the new regulations to encourage domestic manufacturing in the US.

Following this, the NIFTY Pharma sector declined 1.26% during the opening session.

During the day, the index had touched its intraday low of 21,359.30, leading to a 2% fall from its last closing.

Aurobindo Pharma was the biggest laggard in the sector, falling 2.87%. Ajanta Pharma, Lupin, and Cipla were the other top losers, declining 2.7%, 2.15%, and 2.06%, respectively.

Other drug majors' share prices, like Granules (-1.77%), Natco Pharma (-1.74%), Zydus Life (-1.28%), Laurus Lab (-1.26%) and Dr Reddy’s (-1.05%), were also trading lower.

However, only two firms were trading positively—Biocon (1.4%) and Glenmark Pharma (0.27%).

Shares of Cipla and Sun Pharma were the most losing scrips on the NIFTY50 index.

According to a Reuters report, FDA Commissioner Marty Makary said during the signing of the executive order that the FDA plans to start doing surprise inspections of overseas plants, a move he said would bring the oversight more in line with the United States.

The order also directs the Environmental Protection Agency to speed up the construction of facilities.

Meanwhile, global pharma firms like Roche, Novartis, Eli Lilly and Johnson & Johnson had announced investment plans worth up to $50 billion in the US for research & development purposes to avoid any potential tariffs.

The US FDA could also enforce stricter reporting by foreign API producers, and non-compliant overseas plants could be listed publicly, CNBC-TV18 reported.

The US accounts for a third of India's overall pharma exports. Indian pharmaceutical companies supply a substantial proportion of drugs to US residents, with four out of ten of all prescriptions filled in the US in 2022 being supplied by Indian companies.

The BSE Healthcare index was trading at 0.27%.