Indian Pharma stocks sink as Trump eyes 25% tariff

Indian pharmaceutical stocks dropped 2% on Wednesday, hitting a seven-month low. The decline followed Donald Trump’s plan to impose a 25% tariff on pharma imports.

Twelve of the 20 stocks in the sector traded lower. Sun Pharma, India’s top drugmaker by revenue, fell 2%. Dr. Reddy’s dropped 4%, reaching its lowest level since June. Aurobindo Pharma plunged 6%, hitting a one-year low. Cipla, the country’s third-largest drugmaker, declined 2.2%.

The index pared some losses but still traded 0.7% lower by 10:44 a.m. IST.

Indian drugmakers rely heavily on U.S. exports. In fiscal 2024, India exported $8.73 billion worth of pharmaceuticals to the U.S., a 16% rise from the previous year. These exports make up 31% of the industry’s total sales, according to Pharmexcil.

Investors reacted nervously to Trump’s tariff announcement. Shrikant Akolkar, a pharma analyst at Nuvama Institutional Equities, noted that many Indian drug companies depend on U.S. revenue.

On Tuesday, Trump told reporters that tariffs on pharmaceuticals and semiconductor chips would start at 25% or higher. He hinted they would rise significantly over the next year but did not announce a timeline.

Trump said he wanted to give companies time to set up U.S. factories to avoid tariffs. However, Akolkar pointed out that manufacturing in the U.S. requires new approvals and costly labor, making the transition difficult.

Earlier this week, Sun Pharma MD Dilip Shanghvi told ET Now that drug companies would pass the tariff costs to consumers.

Pharma stocks have dropped 12% this year, while the benchmark Nifty 50 has declined 4%.