Asian Pharma Stocks Plunge After Trump’s Drug Pricing Pledge: Could U.S. Drug Prices Drop by 80%?

Trump’s Executive Order Proposal Sends Shockwaves Through Global Markets

On May 12, 2025, former U.S. President Donald Trump announced his intention to issue a new executive order mandating that pharmaceutical companies sell their products in the United States at the same prices they offer in foreign markets. Branded as a measure to address soaring domestic drug costs, Trump claimed the policy could lead to price reductions of 30% to 80% for American consumers. The markets interpreted the move as a direct blow to drug manufacturers’ profitability, triggering widespread selloffs—particularly in Asia.

Asian Pharma Sector Hit Hard: Sharp Losses Across Major Players

Markets across Asia reacted swiftly. In Japan, Chugai Pharmaceutical shares plummeted 10%, Daiichi Sankyo dropped 7.8%, and Takeda Pharmaceutical lost over 5% of its market value. In Hong Kong, BeiGene fell 8.8%, and Innovent Biologics declined 6.4%. In South Korea, names like SK Biopharmaceuticals, Celltrion, and Samsung Biologics each lost more than 3%. The impact was also felt in India, where Sun Pharma fell 7%, while Lupin and Aurobindo Pharma dropped approximately 3% each. These declines reflect growing investor anxiety about the long-term impact of reduced U.S. pricing power.

‘Most Favored Nation’ Pricing Model: A Structural Shift in Global Pharma

The proposed “Most Favored Nation” (MFN) pricing policy aims to align U.S. drug prices with those in the lowest-cost developed countries. While the intent is to ease the burden on American consumers, the implications for pharmaceutical companies are profound. The U.S. market, long known for its premium pricing, represents a critical revenue stream for the global drug industry. Slashing prices in this market could compress margins significantly and force companies to revisit core elements of their business models.

Industry Backlash: “Government Price Controls Harm Patients and Innovation”

Pharmaceutical industry leaders quickly voiced opposition. Alex Schriver, Senior Vice President of the Pharmaceutical Research and Manufacturers of America (PhRMA), warned that “government price setting in any form is dangerous to American patients.” He emphasized that rather than importing failed pricing models from abroad, the U.S. should focus on fixing structural inefficiencies within its healthcare system. Schriver also cautioned that the rising competition from China makes such regulatory interventions even riskier for domestic innovation.

Global Contagion: Europe, U.S., and Australia Also React

The ripple effect extended beyond Asia. In Europe, shares of AstraZeneca, GSK, and Roche dropped between 3.3% and 6.8%. In U.S. pre-market trading, pharmaceutical giants including AbbVie, Pfizer, Amgen, Eli Lilly, and Merck declined between 2.1% and 3.6%. In Australia, shares of CSL and Mayne Pharma also fell, reflecting their exposure to the U.S. market.

Long-Term Implications: R&D Cuts, Global Price Pressure, and Manufacturing Shifts

If implemented, the policy could have far-reaching consequences. Profit margin compression would likely lead to reduced R&D spending, particularly among mid-sized and emerging biotech firms. Countries around the world may begin demanding price parity, increasing global pricing pressure. Furthermore, some firms may consider reshoring manufacturing operations to the U.S., both as a strategic hedge and a way to minimize tariff-related risks under future trade scenarios.

Bottom Line: Regulatory Risk is Back at the Forefront of Investment Strategy

Trump’s announcement is a stark reminder that policy decisions—especially those tied to election-year rhetoric—can rapidly alter market dynamics. Investors must stay alert to evolving regulatory and geopolitical risks, particularly in sectors like pharmaceuticals where profit models are deeply intertwined with public policy. In a climate where headlines can erase billions in market cap overnight, proactive risk management is no longer optional—it’s essential.