In a significant development that sent shockwaves across global pharmaceutical markets, U.S. President Donald Trump signed an executive order aimed at drastically reducing prescription drug prices in the United States. The move has triggered a sharp decline in Indian pharmaceutical stocks, raising concerns about the future of generic drug exports and the potential tightening of global patent regimes.
Trump Pushes for Global Price Parity
President Trump’s executive order, signed on Monday, mandates that U.S. drug prices should align with the lowest prices paid by other developed nations. Under the proposed “Most Favoured Nation” policy, the U.S. would no longer pay more for prescription medicines than any other country. The administration has given pharmaceutical companies 30 days to propose pricing solutions. Should they fail to deliver “significant progress” within six months, further government intervention is expected.
In a social media post, Trump argued that American consumers were unfairly burdened by high drug prices, noting that medicines manufactured in the same facilities are sold for significantly less in other countries. He emphasized that the United States bears a disproportionate share of global research and development costs, indirectly subsidizing affordable drugs for the rest of the world.
Indian Pharma Sector Reacts
The announcement caused immediate ripples in Indian stock markets. Shares of major pharmaceutical firms such as Sun Pharma plunged nearly 7% during early trading, while others including Lupin, Aurobindo Pharma, Divi’s Laboratories, and Glenmark Pharma also experienced a selloff.
Although Trump’s pricing directive primarily targets patented and branded drugs, experts warn of indirect consequences for India’s generic drug industry, which is heavily reliant on the U.S. market for exports.
“The concern lies in the potential policy response from multinational pharma companies,” said P.V. Appaji, former Director General of the Pharmaceuticals Export Promotion Council (Pharmexcil).
Threat of Patent Barriers Looms
Industry analysts believe that global drugmakers may respond to the price caps by tightening intellectual property regulations to prolong their market exclusivity and recover R&D investments. Potential measures include data exclusivity, automatic patent term extensions, patent linkage mechanisms, broader patentability criteria, and evergreening tactics.
Such practices, if adopted widely, could delay the entry of generic drugs into global markets and restrict the availability of off-patent drugs for Indian manufacturers. “These moves threaten to shrink the pipeline of medicines going off-patent, directly impacting India’s generic export prospects,” warned Ravi Uday Bhaskar, another former Pharmexcil chief.
India’s Stance on Patent Flexibilities
India has historically resisted stringent patent norms in trade negotiations, advocating for access to affordable medicines as a public health priority. The country does not recognize data exclusivity and maintains that regulatory authorities can rely on existing clinical trial data to approve generics. It also rejects patent linkage, preventing unnecessary legal hurdles that could delay the launch of affordable versions.
“India blocks evergreening by disallowing patents for minor modifications to existing drugs,” said Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).
However, if global pharmaceutical giants succeed in influencing trade agreements to include such provisions, Indian generic drug manufacturers may face significant challenges. The development and export of specialty generics—high-value, complex generics—could particularly be affected.
The Road Ahead
While the immediate impact of Trump’s executive order may be limited to branded drugs, the broader implications could be far-reaching for India’s pharmaceutical industry. Any moves to fortify global patent laws or extend exclusivity periods could undermine India’s position as the “pharmacy of the world” and disrupt access to affordable medications in many countries.
As the U.S. pushes forward with its aggressive drug pricing reforms, industry stakeholders and policymakers in India will need to closely monitor international negotiations and advocate for a balanced approach that safeguards innovation without compromising global health access.