The shares of pharma companies dropped in trade on August 26 after US President Donald Trump said that he will reduce drug prices in US by a whopping "1,400-1,500 percent". He also reiterated his threat to slap higher tariffs on pharma imports.

The Nifty Pharma index dropped more than 1.2 percent to hover around 22,082, as seen at around 11.22 am. The index has now snapped a three-session gaining streak.

Trump had earlier sent letters to major drug makers, demanding them to lower drug prices in US and bring them in-line with what other nations are paying for new medicines. The letters were sent to Eli Lilly, Novo Nordisk, Pfizer and others, demanding that Most Favored Nation (MFN) pricing be implemented by September 29.

In the letter, Trump issued a 60-day ultimatum to companies to voluntarily comply to the new pricing diktat, failing which US will deploy 'every tool in our arsenal' in order to protect Americans from 'continued abusive drug pricing' practices. Companies will also have to offer certain medicines directly to patients at prices at which they are offered to third-party insurers, Trump's letters said.

A 1,500 percent reduction in drug prices will make exports practically impossible to US. Pharma stocks tumbled after Trump's fresh threats.

Zydus Life shares were the top loser on the index, dropping more than 3.5 percent to trade at Rs 987 apiece. Sun Pharma and Lupin shares dropped more than 2 percent each.

Notably, BofA Securities has downgraded Sun Pharma shares to 'underperform' from its earlier 'neutral' rating, and cut its target price for the stock to Rs 1,570 apiece, CNBC-TV18 reported. This implies a downside potential of more than 5 percent from the previous closing price of Rs 1,656.70 apiece. The international brokerage cited potential risk to Sun Pharma's consensus earnings and its premium valuations are key reasons for the downgrade, as per the report.

Aurobindo Pharma, IPCA Labs, Natco Pharma, Dr Reddy's Laboratories, Torrent Pharma and Ajanta Pharma shares fell over 1 percent each, while Cipla, Divi's Laboratories, Mankind Pharma, Laurus Labs and Glenmark Pharma were down up to 1 percent each.

Bucking the trend, Granules and Abbott India shares were up 2 percent and 1 percent respectively.