trump pharma order: Trump order may see innovative drug prices getting halved, impact generic cos: Nirmal Bang Securities


Safety and pricing biggest US concern on Trump pharma order, says Vishal Manchanda, Equity Research Analyst — Pharma.

The Trump administration has unveiled executive orders to curb drug prices. We understand four of them have been signed. This will mostly be on capping drug prices. This is not the first time that we have come across this news on drug price caps being put in place in India or any other key market like the United States/
Executive orders are special powers that are vested to the president of the USA through which they can bypass the congress for passing certain laws. We have not seen such an executive order in the past, wherein the president directly intervened in terms of controlling drug prices. They are also trying to eliminate rebates in the US system. Trump is looking to cut prices in the US by allowing import of drugs from other countries into the US.

Prices in countries like Canada and European countries too are almost half of what they sell for in the US. So drug price cap will allow drug price parity across geographies. We can see pricing of some innovative drugs coming down by almost 50% and this would also impact some of the generic companies. It would be targeting to launch copies of these drugs. Basically, the market opportunity has been cut down to almost 50% levels of what they are.

It is very early to say what will be the impact, how much will be the pricing problem but do you still expect the US to be by far the biggest market with the biggest volumes and margins?
Yes, US will continue to dominate. There are four executive orders that have been passed but the fourth one is not yet signed and the other thing that has been signed maybe kind of diluted and in fact we are talking of the worst case scenario but the real impact could be much milder depending on how these orders are detailed in terms of what drugs can be imported and what cannot be imported.

Essentially, details will be given. The biggest concern in terms of importing drugs from other geographies to the US has been safety. The USFDA stands have been that since they are responsible about safety, any importation would dilute their efforts that they have been putting in to ensure safety of patients in the US. So that is a concern around this executive order in terms of how they can balance the two issues; safety and pricing both.

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