Is Trump a Good News for Indian Drug Makers?

Indian pharma companies, rose 1.48 per cent to 15465.54 points, while the larger benchmark Sensex fell 1.57 per cent to 27,159.03 points.

Individual pharma companies gained from the development too. Sun Pharma share price, Dr Reddys share price, Lupin share price and Aurbindo Pharma share price rose on the back of the news.

India contributes to nearly one third of all drugs sold in the America and this is not likely to change for now, given the thrust of both Democratic and Republican parties on affordable health care for its citizens. The US market will, however, continue to witness pricing pressure as a result of consolidation of hospitals as well as insurance companies.

Indian drug makers were worried of higher pricing challenges paired with tighter pricing regulation for both brand name as well as generic drugs in the United States, its largest market across the globe, with several pollsters predicting a Clinton victory and a sweep by Democrats in US Senate and House of Representatives.

But that changed on Wednesday when Trump emerged victorious and his fellow Republicans took control of both the House and the Senate. Experts and industry executives said that was the best possible outcome for the pharma companies and considerably eased the overhang of price regulation.

India has the highest number of US Food and Drug Administration (US FDA) approved plants outside the US and accounts for about 13 per cent of US generic drug supply, second only to Canada. India exported drugs worth US$ 11.6 billion in 2014-15. Of this, exports to US alone were US$ 3.8 billion, or a third of total exports.

Generic drugs account for 88 per cent of prescriptions dispensed in the US, and saved the country’s health system US$ 1.68 trillion from the period 2005 to 2015. The US remains a critical market for Indian companies and their profitability in particular is linked to how they perform in this market, which contributes to almost half their revenue.

The Indian investors are now eagerly waiting to find out whether this joy in the pharma sector will prevail or will subside once Trump discloses his policies!