Pharmaceutical stocks came under pressure on Wednesday after US President Donald Trump unveiled a phased tariff plan for imported generic medicines, raising concerns over the long-term outlook for one of the industry’s biggest export markets.The sell-off came even though the proposal gives generic drugmakers a two-year tariff-free window before steep duties are introduced. Nifty Pharma index fell nearly 2% in opening trade as investors weighed the potential impact of tariffs that would eventually rise to 200%.After the news, shares of Sun Pharmaceutical Industries, Cipla, Dr Reddy’s Laboratories, Lupin and Aurobindo Pharma landed among the biggest losers in early trade. Aurobindo Pharma tumbled 3.48% or 54.95 points to 1525.50. Sun Pharma declined to 1943.45, shedding 18.70 points or 0.95% on BSE, while Cipla fell 2.5% to Rs 1,396 per share. Lupin also dropped 2.5% to Rs 2,452, while Dr Reddy’s Laboratories slipped more than 1% to Rs 1,185. Zydus, Alkem Laboratories and Torrent Pharmaceuticals also declined by up to 2%.
Trump’s announcement
In a post on Truth Social, Trump wrote that all generic drugs being brought into the US will have no tariffs for two years. Following which, the tariff will be raised to 100% from August 1, 2028 and then to 200% by August 1, 2029.The phased tariff plan is intended to encourage pharmaceutical companies to establish manufacturing plants and related infrastructure in the US during the transition period. Companies that do not localise production would eventually face higher import duties under the administration’s broader “America First” manufacturing agenda.The announcement also marks a shift in the administration’s approach. Earlier tariff measures in the pharmaceutical sector targeted branded and patented medicines, while generic drugs remained outside the scope of those duties. That policy remains unchanged.
Why it matters for Indian drugmakers
US remains an important market for Indian pharmaceutical giants, with generic medicines accounting for nearly 90% of prescriptions in the country.The two-year tariff-free period offers Indian exporters additional time to reassess their supply chains and investment plans. While the immediate impact on exports is expected to be limited, tariffs of 100% and later 200% could significantly alter the economics of supplying generic medicines to the US for companies that do not strengthen their manufacturing presence there.India’s pharmaceutical industry has been closely tracking changes in US trade policy amid concerns about potential tariffs on medicines. Industry executives have said India’s cost-efficient manufacturing ecosystem remains globally competitive, although prolonged tariff barriers could prompt companies to expand manufacturing capacity in the US or rely more on contract manufacturing partnerships to maintain access to the market.Among Indian drugmakers, Aurobindo Pharma has a substantial manufacturing presence in the US. Dr Reddy’s Laboratories, Lupin, Cipla and Zydus Lifesciences also have manufacturing operations there.Alkem Laboratories and Torrent Pharmaceuticals remain largely dependent on manufacturing facilities in India and have limited exposure to US generics in terms of cash flow generation. Biocon manufactures its biosimilar and generic products from facilities in India and Malaysia, while Senores Pharmaceuticals has a local manufacturing presence serving the US generics market.
