Cipla, Lupin, Zydus Life, Laurus Labs, Mankind Under Pressure: What's Dragging Pharma Stocks Down Today?

Stocks of top pharmaceutical companies, including Cipla, Lupin, Zydus Life, Laurus Labs, Mankind Pharma, etc, remained under pressure on Monday, after United States President Donald Trump's executive order to boost domestic pharmaceutical manufacturing.

Donald Trump on Monday issued an executive order to facilitate the restoration of the manufacturing base for prescription drugs, including the production of key ingredients and materials necessary for the manufacturing of prescription drugs.

Pharma Stocks Under Pressure: Zydus, Ajanta Pharma, JB Chemicals, Lupin, Zydus Life, Etc, Under Pressure

Most of the pharmaceutical sector stocks, including Zydus Life, Ajanta Pharma, Lupin, etc opened in red. Ajanta Pharma Limited was trading 2.25% down at Rs 2528.3 per share on NSE on Tuesday at 12 pm. Similarly, JB Chemical Pharma stock was down 2.36% at Rs 1529 per share on NSE. Lupin was down nearly 2% to Rs 2042 apiece, and its competitor Cipla was trading 2% lower at Rs 1511.3 apiece on NSE. The underwhelming performance of these top pharma stocks dragged down the Nifty Pharma index, which was trading 0.88% lower at 21583.25 points.

Why Are Pharma Stocks Down Today?

Selling pressure in most of the pharma stocks has come after Donald Trump's executive order was released on Monday night. According to the White House, the order directs US Food and Drug Administration (USFDA) to cut the time required for the administration to give clearance to domestic pharmaceutical companies for setting up manufacturing plants.

Trump's latest executive order has directed the USFDA to expedite the process for pharma manufacturing plants "by eliminating duplicative and unnecessary requirements, streamlining reviews, and working with domestic manufacturers to provide early support before facilities come online."

Higher Audit Fees For Foreign Plants

Apart from ordering instructions to support domestic pharma industries, Trump administration has tightened its grip on foreign players in the industry.

After the implementation of the new order, foreign manufacturing plants would be required to pay higher fees for inspections by FDA. Additionally, Donald Trump has also directed the FDA to improve enforcement of active pharmaceutical ingredient source reporting by foreign drug producers and consider publicly displaying a list of facilities that do not comply.

Putting America First in Pharma Industry

Re-emphasising his 'America First' policy, Donald Trump has ensured in his recent executive order that FDA prioritises American manufacturing facilities over foreign manufacturing facilities.

"We don't want to be buying our pharmaceuticals from other countries because if we're in a war, we're in a problem, we want to be able to make our own," said Trump.

Pharmaceutical industry was one of the key sector which was exempted from tariffs announced by Donald Trump in April first week. While exempting pharma industry, Donald Trump had introduced a 10% blanked tariff on all exported items to the US. However, these tariffs are currently on a 90-day hold.

However, there are still speculations about Trump's tariffs on pharmaceutical companies. After exempting pharma companies from tariffs, Donald Trump had announced that his administration will impose never-seen-before tariffs on foreign players in pharmaceutical industry in the US.

The United States is a major importer of finished medicines, especially from India, Europe and China. So far most of these products are exempted from tariffs, but some active pharmaceutical ingredients (APIs) are still facing some levies.