Which Indian companies may be hit hard if US announces tariffs on pharma?

US President Donald Trump has said his government will soon announce new tariffs on pharmaceutical drugs. He made this statement at a fundraising event for House Republicans on Tuesday.

 

“We are going to be announcing very shortly a major tariff on pharmaceuticals,” Trump said. “Once we do that, they are going to come rushing back into our country, because we are the big market.”

 

Trump has frequently emphasised the need to boost domestic production of medicines in the US. According to Bloomberg, he believes that the US depends too much on other countries for medicines. In March, he had said that tariffs on pharmaceutical imports would be announced “at some point in the not too distant future.”

 

 

The latest statement comes shortly after Trump also announced reciprocal tariffs on several countries, which led to sharp falls in both US and global stock markets.

 

According to the reports, if these new tariffs are introduced, they could hit Indian pharmaceutical companies hard. India is one of the top suppliers of generic (low-cost) medicines to the US. Currently, these imports face little to no taxes in America. Meanwhile, India puts a 10 per cent tax on medicine imports from the US, Reuters reported, citing industry experts.

 

How much do Indian firms depend on US sales?

 

The US is a key market for Indian drugmakers. It accounts for nearly one-third of India’s total pharma exports. 

 

- Bengaluru-based Biocon earned 44 per cent of its revenue from the US in the year ending March 2024.  

 

- Mumbai-based Lupin made 37 per cent of its income from the US.  

 

- Hyderabad’s Laurus Labs earned about 17 per cent from North America.  

 

- India’s largest drugmaker, Sun Pharma, earned 32 per cent of its total revenue from US sales. 

 

Other major Indian companies like Dr Reddy’s, Aurobindo Pharma, Zydus Lifesciences, and Gland Pharma also have strong business ties with the US market.

 

Stock markets react negatively

 

Following Trump’s remarks, Indian pharma stocks fell sharply on Wednesday morning. All 20 companies in India’s pharma index were trading lower and dragged down the main Nifty 50 index by about 0.59 per cent as of 10.50 am IST.

 

Biocon, Laurus Labs, and Lupin were the worst hit, with their shares falling between 3 per cent and 5 per cent. Other companies like Sun Pharma, Cipla, and Dr Reddy’s Laboratories saw their stock prices drop between 1 per cent and 2 per cent, Reuters reported.

 

“This is playing a lot on investors’ sentiment and is an overhang until the time when the announcement of the tariffs happens,” said Shrikant Alkokar, equity analyst at Nuvama Group.

 

For now, Indian pharmaceutical companies and investors are waiting for more clarity on the actual details of Trump’s proposed tariffs.

 

[With inputs from agencies]