Nifty Pharma declines 2% after Donald Trump's 100% tariff on branded drugs

The Nifty Pharma index ended 2.14 per cent lower on Friday after United States President Donald Trump announced a 100 per cent tariff on imports of branded and patented drugs effective October 1. 

The index tracking domestic pharmaceutical stocks hit a low of 21,390 and then recouped some losses to end at 21,507. As many as 17 of its 20 constituents ended with losses. Among the top losers were Laurus Labs (down 7.2 per cent), Biocon (down 4.8 per cent), and Zydus Lifesciences (down 4.4 per cent). 

The US is India’s largest market for pharmaceutical exports, accounting for over a third of the total volume, mostly of cheaper generic drugs. 

 

Analysts said the decline was “sentimental”, noting that India’s exports to the US are primarily generic medicines, which may not be affected by the tariffs. 

Sun Pharmaceutical Industries, India’s largest drugmaker by revenue and the heaviest stock on the index, fell about 2.6 per cent. Sun Pharma markets patented drugs, including Ilumya, a psoriasis treatment approved by the US Food and Drug Administration. The firm also has a contract manufacturing unit through European Union partners for specialty drugs, where a 15 per cent tariff applies to EU exports to the US, according to Vishal Manchanda, equity analyst at Systematix Group. 

“The impact on Sun is not very meaningful,” he said. “It may be between 1 per cent to 3 per cent of ebitda (earnings before interest, taxes, depreciation, and amortisation).” 

“There is a general worry that CDMO (contract drug manufacturing organisations) might be impacted as the US moves manufacturing in-house,” Manchanda said. 

“Uncertainty remains whether complex generics and biosimilars will face future tariffs,” said ICICI Securities analyst Pankaj Pandey in a note on Friday. 

 

With inputs from Reuters