Shares of pharmaceutical companies, such as Gland Pharma, Natco Pharma, Cipla and Biocon rallied up to 5.5 per cent on May 21, 2025, as US authorities outlined plans to push pharmaceutical companies to lower their drug prices for US customers.
The US Department of Health and Human Services (HHS) announced on May 20 that it would be setting up a most favoured nation (MFN) prescription drug pricing targets. This came after US President Donald Trump’s recent executive order, signed last week, which directs drug manufacturers to cut medicine prices to align with the prices charged in other countries.
Following the US HSS announcement, the Nifty Pharma index, which tracks 20 companies that reflect the behaviour and performance of the pharmaceutical sector in India, surged as much as 2.3 per cent in today’s session. However, at day's end, it closed with 1.25 per cent gains.
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Gland Pharma Lead Gains
Shares of Gland Pharma, which derives over 50 per cent of its revenue from the US market, jumped as much as 5.50 per cent in today’s trade to hit an intraday high of Rs 1,580 apiece on the NSE. In Q4 FY25, the company derived revenues of Rs 791.8 crore from the US market out of its total revenue of Rs 1,424.90 crore.
Natco Pharma, which also has good exposure in the US market, jumped as much as 4.50 per cent to an intraday high of Rs 890 apiece on the NSE. Likewise, Biocon and Cipla also jumped over 2.50 per cent each. Alkem Laboratories, Abbot India, Ajanta Pharma, Divis Lab, Ipca Labs, Torrent Pharma, and Sun Pharma climbed 1.50-2.50 per cent during the day.
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Barring JB Chemicals & Pharmaceuticals and Mankind Pharma, all other constituents of the Nifty Pharma index closed in the green.
What Is MFN Drug Pricing Policy
The MFN drug pricing policy is a proposal by the US government that aims at lowering the cost of prescription drugs in the US. This policy mainly targets high-cost drugs under Medicare Part B, which are typically administered in hospitals or clinics. By linking US drug prices to international benchmarks, the US government hopes to significantly reduce costs for both patients and taxpayers.
In a press release dated May 20, HHS Secretary Robert F Kennedy Jr said, “For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less. That ends today. We expect pharmaceutical manufacturers to fulfil their commitment to lower prices for American patients, or we will take action to ensure they do.”
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An HHS report released in January this year, using data from RAND Corp., showed that drug prices in the US—both branded and generic—are nearly 2.80 times higher than in other Organisation for Economic Co-operation and Development (OECD) countries. After factoring in estimated US rebates, prices are still around 3.20 times higher.
These new targets set by HHS will aim to significantly lower drug prices in the US to ensure US customers do not pay more than patients elsewhere, HHS said in its press release.
