Pharma stocks drop on worries new US rule will hit pharma exports

Ten pharma stocks fell 0.16% to 3.07% at 12:25 IST on BSE after the United States government reportedly made it mandatory for Active Pharmaceutical Ingredients to be manufactured locally.

Lupin (down 3.07%), Cipla (down 2.27%), Divi's Laboratories (down 2.95%), Wockhardt (down 5.61%), Glenmark Pharmaceuticals (down 1.58%), Aurobindo Pharma (down 1.34%), Cadila Healthcare (down 1.39%), GlaxoSmithkline Pharmaceuticals (down 0.65%), Dr Reddy's Laboratories (down 0.16%) and Sun Pharmaceutical Industries (down 0.4%) edged lower.

Meanwhile, the S&P BSE Sensex was up 164.34 points or 0.68% at 24,387.66

US is a key market for Indian pharma companies. At present, nearly 80% of drug raw material requirement is met by India or China. This decision is likely to significantly impact Indian pharmaceutical exporters as it will impact drug exports, reports indicated. Before the new norms came into effect, US-based companies were allowed to procure Active Pharmaceutical Ingredients (APIs) from countries like India and China, make the fixed formulations (final product) in the US and sell the drugs to the US government. The changes in the norms have been made under the Drug Master Files (DMF), a submission to the USFDA, made solely at the manufacturers' discretion to provide confidential information about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of one or more human drugs, reports suggested. This change is likely to affect Indian companies that have subsidiaries or holdings in the US that procure APIs from their Indian counterparts and make the finished product in the US, reports further informed. Indian companies are not allowed to quote for government contracts in the US since India is not a signatory to the WTO's government procurement agreement.

Meanwhile, as per reports Pharmexcil - India's pharmaceutical Export Promotion Council - has approached the Commerce Ministry, requesting authorities to intervene and resolve the issue. The Indian government would first try to resolve this issue bilaterally, failing which it would consider approaching the World Trade Organisation's dispute settlement panel, reports added.

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