India’s pharmaceutical stocks were jolted on Friday, when President Donald Trump announced a 100% tariff on imported branded and patented drugs, effective October 1.
The move sent shockwaves through global markets, especially hitting Indian pharma stocks hard, given the country’s significant role as a supplier to the US.
The tariff, which exempts companies establishing manufacturing plants in the US, aims to boost domestic production but raises uncertainty for Indian exporters.
With key pharma players seeing their share prices slide, investors scrambled to assess the fallout of this bold protectionist measure.
Trump’s pharma tariffs: India’s stock market reacts
Hours after the tariff announcement, Indian pharma stocks took a nosedive.
Giants like Sun Pharma, Lupin, and Cipla saw their share prices slip by around 3-4%. Investors reacted not just to the immediate tariff hit but to what it signaled: heightened trade tensions and uncertainty around one of India’s strongest export sectors.
The mood turned cautious, with foreign investors selling off shares amid fears that the tariffs could eventually extend beyond patented drugs to generic medicines as well.
Yet, despite the sharp drop, some market experts viewed this selloff as an overreaction fueled more by fear than fundamentals.
Indian pharma still boasts strong pipelines and a dominant market position in generics in the US, which remain exempt, for now.
Many believe this dip could be a short-term bump rather than a long-term slide, prompting savvy investors to keep an eye on quality stocks for potential buying opportunities.
Impact on Indian pharma exports
India’s pharmaceutical exports to the US are worth about $10.5 billion annually, mainly driven by generics, which form the backbone of the country’s pharma exports.
While this 100% tariff targets branded and patented medicines, it could still hit companies like Sun Pharma, which have specialty branded drugs in their US portfolio.
The higher cost from tariffs could make Indian drugs less competitive, trimming revenues and forcing some adjustments in supply chains.
More broadly, the announcement challenges India’s pharma sector to reconsider its heavy reliance on the US market.
On the bright side, the exemption for firms building US manufacturing plants presents an opportunity to invest in domestic production facilities to gain tariff relief.
Indian pharma companies now face the choice of either absorbing higher costs or shifting some production to the US to stay in the game.
How this tariff will reshape trade flows and investment decisions will unfold in the coming months, but the message is clear: the simple status quo of relying on exports to the US is under serious threat.
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