The Pharma stocks are seeing big cuts in early trade. The Nifty Pharma Index is down over 1% and the BSE Healthcare Index too remains under pressure. Some of the big Nifty losers include the likes of Cipla, Dr Reddy’s and the like. The pharma sector stocks are in the red after the new executive orders that US President Donald Trump signed last evening in a bid to encourage domestic manufacturing in the United States.
What orders did US President Donald Trump sign?
The latest report on Reuters indicate that, US President Donald Trump signed an executive order with the objective to cut down time needed to approve setting up pharmaceutical plants in US. This is part of new regulations to encourage domestic manufacturing in the country.
As per Reuters, the US President’s orders also directs the health regulator to improve enforcement of active-ingredient source reporting by foreign producers and “consider publicly displaying a list of facilities that do not comply.”
What’s the impact of Trump’s new order on Indian pharma industry?
Aditya Khemka, fund manager at InCred Asset Management and a leading pharma and healthcare analyst says, “I do not see much of an impact in business immediately for the Indian pharmaceutical companies. However, over the long term, these companies might feel compelled to create some capacity in US and hence face higher costs and margin pressures.”
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA) and the Chairman of the Indian Institute of Health Management corroborated the view and emphasised that Indian pharma industry is unlikely to see any immediate impact.
According to sources in the industry, while many seem guarded and may prefer to wait and watch, those willing to share thoughts without being named say, the executive order is essentially meant to encourage investments into the US and the measures are aimed at ensuring faster approvals and a heightened ease of doing business. Therefore, it would be a welcome measure and a move in the right direction for those pharmaceutical companies that want to create capacities in the US. On the regulatory oversight, some exuded confidence and pointed out that since all the leading Indian pharma companies are already focussed on meeting the USFDA norms, the FDA stance to increase inspection of overseas sites should not deter them in any way.