Global brokerages Citi and Nomura have flagged potential risks for Indian pharmaceutical companies following the proposed US executive order aimed at slashing drug prices by 30–80%. Both brokerages see Sun Pharma as the most exposed within their coverage due to its significant US specialty drug portfolio.
Citi: Negative for Sun Pharma; generics may remain insulated
According to Citi, the issue of high drug prices in the US stems from the structure of the insurance system, and simply lowering listed prices may not address the root cause. However, such regulatory headlines are seen as negative for large branded and specialty drug makers, with Sun Pharma specifically mentioned.
Citi notes that generic drug manufacturers are likely to be least impacted, as their pricing is already significantly lower and not tied to the branded reimbursement system that may face reforms.
Nomura: Sun Pharma’s Ilumya at risk; specialty drug push may be discouraged
Nomura has also cautioned that the proposed pricing reform could have a significantly negative impact on branded and specialty drug sales, calling the development a “mixed bag” for generics but outright negative for high-value brands.
The brokerage estimates Sun Pharma’s US specialty sales at around USD 1.04 billion in FY25, with its flagship product Ilumya contributing USD 570 million. Nomura believes over 50% of Ilumya’s sales are reimbursed via Medicare Part B, where pricing reforms would be most impactful.
With the US listed price of Ilumya reportedly four times higher than in other developed markets, any move toward international reference pricing could materially affect Sun Pharma’s earnings outlook.
Nomura also added that such reforms may deter other Indian pharma companies from entering or expanding in the US specialty drug segment, considering the risk-reward trade-off may become less favorable.
Disclaimer: This article is based on brokerage commentary and public disclosures. It does not constitute investment advice. Business Upturn and the author do not recommend buying or selling any stock mentioned.
