Pharma stocks are bucking the overall market trend and are up significantly in a falling market today. While the broader market slipped into the negative territory in today’s trading session, the pharma stocks went the other way. The Nifty Pharma index rose nearly 2%. This surge in the Pharma sector stocks came on the back of key global development.
Top gainers in the pharma pack
The top movers at this hour in the Nifty Pharma stock include Dr Reddy’s Laboratories, which jumped around 4%, followed by Granules India, Glenmark Pharmaceuticals, Aurobindo Pharma, and Divi’s Laboratories, all rising between 3-4%. Most stocks in the Nifty Pharma index were in the green, except Natco Pharma.
Let’s take a look at the three reasons behind this sharp move in pharma stocks –
Trump’s executive order many not hurt generics
US president Donald is always in the limelight for various reasons and developments. In the latest development, Trump signed an executive order aimed at slashing drug prices in America. The directive demands that medicine prices in the US be aligned with those in other developed countries like Canada and the UK. However, analysts believe this rule is unlikely to severely affect Indian pharmaceutical companies, especially those selling generic drugs.
“Indian pharma exporters will face pricing pressure in the US from Trump’s executive order reducing drug prices. This will impact their stock prices,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
US remains a key market
Indian pharma players like Dr Reddy’s, Lupin, and Aurobindo Pharma generate a large portion of their revenue from the US generic market. Since the pricing pressure might mainly affect big pharma companies selling brand-name drugs, Indian firms are likely to face limited impact.
Defensive sectors appeal in volatile markets
With markets turning choppy after Monday’s rally, investors are turning to defensive plays. Pharma is traditionally seen as a safe haven during times of uncertainty. The fact that this rally comes a day after indices posted their biggest single-day gain in four years points to profit booking elsewhere, and fresh buying interest in sectors like pharma.