In a signature Trumpian move, the former U.S. President signed what he called one of the “most consequential Executive Orders” in American history—this time, targeting sky-high prescription drug prices. The order demands that pharmaceutical companies lower drug prices in the U.S. to match what other nations, especially those with competitive healthcare systems, pay. Welcome to “Most Favoured Nation” pricing.
The goal? End what Trump framed as “global freeloading” and help Americans avoid paying three times more than OECD nations for the same meds.
But there’s a catch. Actually, a few.
While the executive order zeroes in on bloated brand-name drug costs and complex supply chains, the buzz in India was immediate—would the $50 billion Indian pharmaceutical export machine, particularly its generics sector, get caught in the crossfire?
According to major analysts and industry experts, the generic drug sector in India can breathe cautiously, for now. The Indian Pharmaceutical Alliance (IPA), representing about 80% of India's pharma export value, emphasized that the U.S. generics market thrives on razor-thin margins and bulk volumes. Generics account for 90% of prescription drug volumes in the U.S. but only about 13% of market value. Translation: not the big pharma profits Trump’s EO is chasing.
Experts at JM Financial, HDFC Securities, and India Ratings & Research largely agree—generics aren’t the main target. In fact, Contract Development and Manufacturing Organizations (CDMOs) in India might even see increased demand as American pharma scrambles to cut costs elsewhere.
Sudarshan Jain of IPA noted that while generics are unlikely to be affected immediately, innovator companies—those pushing new, patented drugs—are on the clock. They’ve got 30 days to bring prices down or face possible exclusion from Medicare and Medicaid contracts. Meanwhile, Nishith Sanghvi from India Ratings warns of longer-term risks: if the order shrinks overall U.S. pharma profitability, Indian companies heavily reliant on U.S. exports (some derive up to 35% of their revenue from there) might have to re-strategize their capital allocation and R&D.
While major Indian pharma giants like Sun Pharma and Cipla are relatively shielded, small and medium-sized manufacturers, particularly those just entering the U.S. market or reliant on fewer molecules, face an uphill climb. Lower reimbursement rates could compress margins even further, potentially making the U.S. a less viable export target.
On the U.S. side, small pharmacies, independent distributors, and specialized clinics may find their inventory pipelines disrupted as large pharma realigns sourcing strategies to comply with MFN pricing. Price pressure may lead to fewer product options, especially for niche or low-volume generics.
1. Diversify Export Markets: Indian SMBs should explore markets with growing demand—Latin America, Southeast Asia, and parts of Africa. Don’t put all your generics in Uncle Sam’s basket.
2. Invest in Vertical Integration: Controlling more of your supply chain—from API production to finished dosage—can create price efficiencies to compete even in a squeezed U.S. market.
3. Focus on Specialty Generics: Unique formulations, complex generics, or those with high barriers to entry are less vulnerable to MFN-style pricing constraints.
4. Collaborate with CDMOs and Distributors: U.S.-based small medical businesses can partner with Indian CDMOs to secure lower-cost, high-quality supplies while staying compliant with the new pricing structures.
5. Lean Into Tech: Automation in compliance, tracking, and inventory management can help small players handle pricing shifts and demand swings more efficiently.
Trump’s executive order is part policy, part campaign flex, but its implications are real. While generic drug manufacturers in India appear to be spared, for now, the ground is shifting. The U.S. pharmaceutical market may not offer the same allure it once did, particularly for small and medium-sized players. Adaptation, diversification, and partnership will be key to thriving in this new era of global pricing realignment.
Need help pivoting your pharmaceutical tech strategy or supply chain systems to brace for the future of drug pricing?
Contact Epoch Tech Solutions today for a free consultation.
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