Why Pharma Stocks Are Under Pressure Today

Top drug makers, including Wockhardt, Lupin and Cipla, came under a sharp selloff on Thursday following a news report saying the US government has made it mandatory for active pharmaceutical ingredients (APIs) to be manufactured locally.

According to the Hindu Business Line report, "the decision has already sent Indian pharmaceutical exporters into a tizzy, as it will significantly impact Indian drug exports. Before the new norms came into effect, US-based companies were allowed to procure APIs from countries like India and China, make the fixed formulations (final product) in the US and sell the drugs to the US government".

Currently, nearly 80 per cent of drug raw material requirement is met by India or China, the report added.

The pharma sub-index of National Stock Exchange fell as much as 2.45 per cent in morning traded, and pharma shares such as Divis Lab and Glenmark Pharma fell sharply.

The pharma sub-index on NSE closed 1.13 per cent lower, underperforming the broader Sensex, which closed 0.48 per cent higher.