How Trump's executive order on drug prices can hit Indian research companies

Copyright © HT Digital Streams Limit all rights reserved. Jessica Jani 4 Min Read 19 May 2025, 02:19 IST Contract Research Organizations (CROS) offers research services to pharmaceutical and biotech businesses that want to outsource parts of their clinical trials and development. Summary The order is expected to have an impact on innovator companies, which could spend less on research in an attempt to cut costs, analysts told Mint. Indian pharmaceutical businesses that provide research services could get a hit from US President Donald Trump’s executive order on lowering prices of prescription drugs, analysts told Mint. The order, which asks for a policy under which the US would pay the ‘most favorable nation’ price-in essence the lowest price that other comparable countries pay for certain medicines is expected to take innovator companies, rather than those that make cheap generic medicines. Innovators will look at ways to lower costs so that the amount they spend on research can fall, the analysts said. “If you look at a contract research organizations … it will be affected first. Because if you lower the prices by almost 30 to 80% for innovators, there is less incentive for them to put most of the CapeX on these high-end products,” said Tausif Shaikh, head of the pharmaceutical analyst at BNP Paribas. Contract Research Organizations (CROS) offers research services to pharmaceutical and biotechnical enterprises that want to outsource parts of their clinical trials and development. Also read: Trump’s drug price suppression, such as its trade war, could be more bark than bite. “Such an executive order could dramatically reform the US pharmaceutical industry and severely affect the US biotechnical sector,” analysts at JM Financial Institutional Securities said in a note on May 12. “CRO income is likely to decline, as R&D spending will fall immediately,” they noted. The funding for biotics in the US has been uneven over the past few years, and Trump’s cuts aimed at the National Institute of Health (NIH) have risen further concerns. Muted accompaniment companies such as Syngenes and Pyramal Pharma, which offer research and patient discovery services, have already led for subdued single-digit growth in these businesses for FY26. Deepak Jain, CFO, Syngene, told investors in a call after earnings on April 24: ‘We expect FY26 to be a short-term year with an uncertain short-term macro-environmental building in the restoration of biotechnical financing, great pharmaceutical restructuring and urgent urgency in the Biosecure Act … Develuction and Managing and Managing and Farured Tares, Driven by Performance and Contract (Contract Organization) Enterprises. (RFPs), as well as a good growth in its innovation-related OP-Patent work-as of prolonged decision-making time lines of clients. Wanting supply chains outside of China wants to diversify. Orders, as businesses want to lower the costs … Big US pharmaceutical businesses that want to cut the manufacturing costs will not be able to move production to the US. Industry managers carefully watch the developments, but believe it is too early to speculate. [this]… if they want to lower the costs and depend on third -party players to work for them, ‘Shah said. Read also | Mint explanator: Why Indian Pharma is haunted by Trump’s latest drug policy, there is a possibility that CDMOs will see some incremental benefits in the future, it’s probably not in the near term, Shaikh said. [CDMOs] To manufacture their existing set of products, Shaikh said, adding that it takes 12-18 months to move manufacturing. “It may be the case that if they have some new introductions in their pipeline, they can go to CMOs,” Shaikh added. There is also skepticism about whether Trump’s order will go through, and how it will be implemented. Given in an office, in which case the impact is very limited.