Nifty Pharma index slips 3%; Natco, Glenmark, Lupin, Laurus down up to 10%

Thus far in the calendar year 2025, the Nifty Pharma index has slipped 11 per cent, as against 3.7 per cent fall in Nifty 50.

Shares of pharmaceutical companies were under pressure with Nifty Pharma index falling nearly 3 per cent on the National Stock Exchange (NSE) in Friday’s intra-day trade after the US President Donald Trump announced a reciprocal tariff regime for all trade partners.

 

Natco Pharma, Laurus Labs, Lupin, Glenmark Pharmaceuticals, Granules India, Aurobindo Pharma and Mankind Pharma were down between 4 per cent and 10 per cent in intra-day trade.

 

At 11:26 AM; Nifty Pharma index, the top loser among sectoral indices, was down 3 per cent, as compared to 0.67 per cent decline in the Nifty 50. Thus far in the calendar year 2025, the pharma index has slipped 11 per cent, as against 3.7 per cent fall in the benchmark index.

 

President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, raising the prospect of a wider campaign against a global system he complains is tilted against the US, the Bloomberg reported. CLICK HERE FOR REPORT

 

Interestingly, Trump’s first term coincided with a challenging period for Indian pharma, resulting in subdued stock performance over five years. During this time, the sector not only underperformed the Nifty 50 index until December 2020 but also posted negative returns until the onset of the COVID-19 pandemic. The sector struggled with various factors, including consolidation in the US distribution channels, regulatory challenges from the FDA concerning key plants, a lack of major product approvals, as well as price control measures and a ban on FDCs in India, according to analysts at JM Financial Institutional Securities.

 

While none of these issues were directly caused by Trump's presidency, his ongoing focus on US manufacturing, tariff increases, and efforts to reduce drug costs raised concerns within the pharmaceutical industry. It is likely that, apart from the emphasis on domestic drug manufacturing, most of Trump’s policies will be beneficial to Indian generic pharma companies, the brokerage firm said in the January 2025 sector report.

 

“In our view, most of the expected changes to the US healthcare system under Trump 2.0 are likely to benefit Indian players, except for the push for increased US drug production. Expanding US drug manufacturing on a large scale is a counter-intuitive move, as it would likely lead to higher drug prices, undermining the primary goal of reducing healthcare costs,” analysts said.

 

While price negotiations for novel products may drive more outsourcing to CDMOs, the removal of Pharmacy Benefit Managers (PBMs) or the introduction of more wholesaler groups to reduce the bargaining power of intermediaries would benefit Indian generic players. Additionally, the imposition of high tariffs on China, along with efforts to reduce dependence on China for medicines and medical research, would benefit Indian manufacturers. Furthermore, there appears to be strong bipartisan support for China+1 initiative, the brokerage firm said in a report.

 

Meanwhile, among individual stocks, Natco Pharma shares slipped 11 per cent to Rs 872.65, extending its previous day’s fall after the company reported a weak set of numbers in its December 2024 quarter (Q3FY25) results. In the past two trading days, the stock tanked 29 per cent. 

 

The company’s consolidated profit after tax (PAT) declined 37.8 per cent year-on-year (YoY), at Rs 132.40 crore. On a sequential basis, PAT fell 80 per cent from Rs 676.5 crore in Q2FY25. Total revenue of the pharmaceutical company declined 18 per cent YoY and 54.6 per cent quarter-on-quarter (QoQ), at Rs 651.crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin decreased to 33.0 per cent in Q3FY25 from 38.3 per cent in Q3FY24 and 60.5 per cent in Q2FY25.

 

During the quarter, contribution from the export formulation business was lower. However, the company expects healthy growth of business in the ensuing quarters. The formulation export segment recorded 52.8 per cent YoY and 76.4 per cent QoQ decline in revenue at Rs 285.80 crore.

 

A significant portion of the company's revenue comes from the US market, making Natco vulnerable to regulatory and market changes there. As an export-oriented company, the company faces risks from exchange rate volatility as well.

 

Shares of Concord Biotech plunged 16 per cent to Rs 1,777.70 in intra-day trade, after the company reported 2 per cent YoY decline in its consolidated PAT at Rs 75.92 crore in Q3FY25. Revenue remained flat at Rs 244.22 crore during the quarter, against Rs 240.80 crore in Q3FY24. Ebitda margin contracted 390 bps to 40.1 per cent from 44.0 per cent.

 

The management said the growth was impacted on account of lumpiness in the procurement pattern of customers and some spill over revenue to the following quarter. They remain optimistic of the company’s growth in both Active Pharmaceutical Ingredients (API) & Formulation segment on the back of new product addition, customer addition and incremental wallet share gain from existing customers.