Indian drug makers fell in early Thursday trades after U.S. President-elect Donald Trump said pharmaceutical companies were "getting away with murder" by charging high prices.
Trump also said he'd force the industry to bid for government business, in his first post-election press conference.
Pharma has a lot of lobbyists and a lot of power and there is very little bidding. We're the largest buyer of drugs in the world and yet we don't bid properly and we're going to save billions of dollars.Donald Trump, U.S. President-Elect
The fall in domestic drug makers was broadly in-line with the slump seen overnight in the U.S. healthcare stocks.
Trump threatens to force pharmaceutical industry to bid for government business. https://t.co/ondBDHtezm pic.twitter.com/FdDvkOfCvk
Trump's threat to negotiate drug prices is applicable only to U.S. brand name companies, DG Shah, the secretary general of the Indian Pharmaceutical Alliance told BloombergQuint on the phone. The U.S. doesn't directly regulate medicine prices, unlike much of the rest of the globe.
This was only for innovative companies. He has said that he wants the ability to negotiate for state procurement. If he allows us (Indian pharma companies) to supply to Medicare, it will only open up the market for us.DG Shah, Secretary General, Indian Pharmaceutical AllianceAccording to Shah, Trump's comments were directed at American companies that manufacture in foreign locations and sell in the U.S. at higher prices.
My interpretation is that this comment does not apply to what we (Indian companies) sell in the U.S. During his campaign, he had repeatedly said that if it helps bringing medicine prices down, he has no issue with import of drugs. This is the interpretation of the statement he made, in the context he made.DG Shah, Secretary General, Indian Pharmaceutical Alliance“I am not saying Indian companies are not impacted,” added Shah, acknowledging the rub-off effect on Indian pharmaceutical companies that are focussed on the U.S. Leading pharmaceutical such as Aurobindo Pharma Ltd., Dr. Reddy's Laboratories Ltd., Cadila Healthcare Ltd., Sun Pharmaceutical Industries Ltd., Lupin Ltd., and Glenmark Pharmaceuticals Ltd., get between 35-50 percent of their revenues from the U.S.
Pricing Pressure
Pharmaceutical companies in the U.S. have been facing increasing pricing pressure in the U.S. for two years now, and larger companies have guided for low-to-mid single digits price erosion.
In 2016, the NSE Nifty Pharma Index clocked its worst yearly performance in eight years, falling 14.2 percent, after sharp increases in the costs of some life-saving drugs drew scrutiny in the press and among lawmakers.
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