Leading pharma exporters to US could potentially face business disruption, reflecting in the share prices on May 6, after President Trump signed an Executive Order to promote domestic drug manufacturing facilities.
Shares of Sun Pharma were lower by over 1.5 percent as the top Sensex loser, while Cipla is down over 2 percent, Biocon down 0.3 percent, and Lupin's share were lower by more than 3 percent as the top laggard on BSE 100 in early trade. The Nifty Pharma index was lower by 1.5 percent in early trade, with Aurobindo Pharma as the top loser, down over 3 percent, and followed by Lupin and Cipla.
US President Trump signed the executive order on May 5 to rebuild US prescription drug manufacturing, with a eye on reducing reliance on foreign-made medicines, and has directed authorities to accelerate facilities designed to make prescription drugs, active pharmaceutical ingredients (APIs), and other necessary raw materials. The order is seen as a step towards reducing US' dependence on foreign medicines, and step up domestic production of key pharma ingredients.
Leading US Pharma Exporters
For Sun Pharma, US revenue for March quarter came in at $474 million, and accounted for more than 30% of the company's consolidated sales. The company has been taking steps to offset the slide in the generics business sales by growing its specialty business growth, and even exploring potential acquisitions in this space. Sun Pharma clocked as much as 72.7% of its total turnover via exports in FY24.
Other major US pharma exporters from India include Aurobindo Pharma, Dr Reddy’s Labs, Lupin, Cipla.
What The Executive Order Entails
The USFDA is expected to submit a report within 180 days of the order, reviewing regulations and guidance on development of domestic pharma manufacturing. The Executive Order also proposes steps to eliminate ' duplicative or unnecessary requirements' in regulations.
Within 90 days of the date of the order, the USFDA is required to develop improvements to its inspection regime to ensure 'routine reviews' of overseas manufacturing facilities that supply medicines to the US. The order proposes an increased fee on foreign manufacturing facilities.
The order has also proposed a centralized coordination of environmental permits required to expand domestic pharmaceutical manufacturing capacities.
The Environmental Protection Agency (EPA) is also required to ensure faster approvals for factories of pharma products, APIs, and other raw materials. "Within 180 days of the date of this order, the Administrator of the Environmental Protection Agency (EPA) shall take action to update regulations and guidance that apply to the inspection and approval of new and expanded manufacturing capacity of pharmaceutical products, active pharmaceutical ingredients, key starting materials...," the Executive Order said.
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