Nifty Pharma index falls for 4th day, sinks 4% as new US tariff risks mount

Nifty Pharma index today: The Trump administration may announce new tariffs on drugmakers that have not struck deals guaranteeing low prices in the country

Pharma stocks today: Shares of pharma companies fell nearly 4 per cent in Thursday's trade after reports indicated that the Trump administration may announce new tariffs on drugmakers that have not struck deals guaranteeing low prices in the country.

 

The Nifty Pharma index extended its losses for the fourth straight session, dropping nearly 4 per cent. As of 1 PM, the Nifty Pharma index was down 357 points, or 1.6 per cent, at 21,654, with 19 out of 20 constituents trading in the red. Individually, only Dr Reddy's was the gainer.

 

Biocon, Torrent Pharmaceuticals, and Sun Pharma were the top losers, falling up to 4 per cent. Other counters like Wockhardt, JB Chemicals & Pharmaceuticals, Piramal Pharma, and IPCA Laboratories were down in the range of 2 to 3 per cent. 

 

 

According to reports, the Trump administration has been ​considering a 100 per cent tariff on imported branded and patented medicines, prompting global drugmakers to ramp up ​US manufacturing and stockpile inventory.

 

Several companies like Pfizer, AstraZeneca have already ​secured multi-year tariff exemptions through pricing deals and commitments to the new TrumpRx.gov platform. The platform allows consumers to buy discounted drugs directly from pharma companies. Eli Lilly, Johnson & Johnson and Merck have pledged billions to expand US operations to avoid penalties.

 

Companies that ​do not ​have agreements and are not in negotiations with the government will ​be subject to 100 per cent tariffs, ​reports said. 

According to Jefferies, the levies are set to be announced as soon as today and would be applied on companies that have not struck a deal with the White House. Tariffs on imports from countries that have struck trade deals with the White House would also be capped according to the terms of the deal.

 

The fresh levies announced this week are as a result of Sec 232 investigation, it said, adding that the plans aren't yet final and could still change, and there could also be exemptions for certain medicines/ disease categories.  Jefferies believes that tariffs on generics companies including those from India will remain exempt.  "Our base case remains that generics would remain exempted from any tariffs in the US. We believe imposing tariffs on generics which operate at thin gross margins risk higher prices from potential drug shortages caused by to supply-chain disruptions," the brokerage said in a note.  Sun Pharma is the most exposed Indian company to tariffs as the company derives around 20 per cent of its overall revenue from innovative medicines. As per Jefferies' analysis, Sun Pharma's key innovative products are manufactured in South Korea, EU or within the US. Since South Korea and the EU have negotiated pharma tariffs of 15 per cent with the US, Jefferies expects that tariffs on Sun Pharma's innovative products will also be capped at 15 per cent.