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Pharma sector stocks in the Indian stock market showed strong resilience on Monday despite initial pressure due to the anticipated executive order by U.S. President Donald Trump aimed at cutting prescription drug prices in the United States.
The Nifty Pharma index opened the day at 20,949.70 but soon dropped sharply by more than 1,300 points, touching a low of 20,600. The early decline was in line with market expectations that Indian pharmaceutical companies could come under pressure due to the U.S. move. However, as investor confidence improved following signs of mutual understanding between India and Pakistan on conflict issues, the market mood shifted. This positive sentiment helped the Nifty Pharma index rebound more than 2.5 per cent or 1300 points from its intraday low and was last seen trading flat at 21,047. Experts had predicted a challenging session for pharma stocks as President Trump was scheduled to sign a new executive order at 9 AM ET on Monday (6:30 pm Monday, Indian Standard Time). The order is aimed at reducing the prices of prescription drugs and pharmaceutical products in the U.S. by an estimated 30 to 80 per cent. Ajay Bagga, Banking and Market Expert told ANI "The US is expected to make a formal announcement on Monday morning US time. Pharma shares will face some pressure as President Trump is expected to sign an executive order that will reduce US prices of prescription drugs and pharmaceuticals by an expected 30 to 80 per cent at 9 AM ET on Monday". Under the new "Most Favored Nation" (MFN) pricing rule, the U.S. will align its drug prices with the lowest prices available in other countries. This measure is expected to bring immediate cost relief for American patients but could have global implications for the pharmaceutical sector. Industry watchers like GTRI believe the MFN pricing rule may lead to a global price correction. Pharmaceutical companies might intensify efforts to push for higher drug prices in low-cost markets such as India. This could be done by urging changes in India's patent laws through international trade talks, potentially increasing drug prices in the Indian market in the long term. Despite these concerns, the strong recovery in the Nifty Pharma index reflects investor confidence in the Indian pharma sector's ability to withstand external pressures and adjust to global regulatory changes. (ANI)
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