Pharma stocks fall up to 6% on likely new US order to lower drug costs
Sharekhan remains cautious on pharma sector.
Leading healthcare stocks like Lupin, Sun Pharma, Dr Reddy's Labs etc, which have larger proportion of US business in their revenues, dropped up to 6 percent intraday Friday after a media report indicated of likely new US order to lower drug costs in the US.
President Donald Trump's administration is preparing an executive order aimed at lowering US drug costs and officials in the administration will meet later today, Bloomberg said quoting people familiar with the matter.
According to a report, one policy being discussed is support for value-based agreement, in which pharma companies and health insurers develop arrangements to pay for products depending on how well the work.
Sharekhan said this move could further create pricing pressure and hurt Indian companies that are already facing regulatory issues and currency woes.
The research house continued to remain cautious on the sector.
Meanwhile, Ipca Labs was the biggest loser among pharma stocks, especially after the USFDA said all drugs manufactured from Ratlam, Indore and Piparria manufacturing facilities will be refused admission into the United States.
API Chloroquine phosphate, however, is an exception as the drug will be reconsidered if shortage and/or medical necessity implications change, the US health regulator said."Drugs from these facilities are not allowed in the US until the company can demonstrate that the drugs manufactured from these plants and intended for the US market are in compliance with good manufacturing practice," the company said in its filing.