Natco Pharma, Cipla, other pharma shares rise up to 4% as US to set targets to lower drugs prices, generics could be exempted

Natco Pharma, Cipla, other pharma shares rise up to 4% as US authorities to set targets to lower drugs prices

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Pharma shares rallied on May 21 after the US Department of Health and Human Services said it is working to implement an executive order aimed at lowering healthcare costs.

The department expects drugmakers to align US prices for brand-name products across markets without generic or biosimilar competition.

The statement comes as a relief for biosimilar and generic drugmakers as it talks about price cuts only for branded drugs, indicating that generics will not be affected, two analysts told Reuters.

Consequently, Indian pharma shares rallied up to 4% on May 21. Nifty Pharma index gained 1.7%, rebounding from a 1.3% drop in the previous session. Eighteen of the 20 constituents advanced.

At 11:18 am, shares of Gland Pharma were trading 3.5% higher at Rs 1,551.4 apiece while those of Natco Pharma and Cipla were trading 2.39% and 2.32% higher at Rs 890 and Rs 1,491 apiece, respectively.

Biocon stocks rose over 2% and a similar rise was seen in the Granules' scrip.

A day ahead of its Q4 results, Sun Pharma stock was trading 2% higher at Rs 1,742.

HHS said it is asking drugmakers to price drugs that don’t already have generic competition at the lowest level offered to any member of a group of countries in the Organization for Economic Cooperation and Development that have a gross domestic product per capita of at least 60% of US levels.

Trump wants prescription drug prices to drop by between 59% and 90%. Wall Street analysts and legal experts have said his order would be difficult to implement and is likely to face legal challenges.

With inputs from Reuters