10 Feb , 2025 By : Debdeep Gupta
Concerns over the possibility of US President Trump imposing tariffs on pharma imports weighed down on pharma stocks in trade on February 10. This comes from Trump's threatening to impose a 25 percent tariff on steel and aluminum imports in the US, adding that similar tariffs would also be applied to other goods, including pharmaceuticals, oil, and semiconductors.
With the US market making up a huge chunk of sales for several Indian drugmakers, fear of increased tariffs on exports to the country has sent investors on a cautious footing. Accordingly, several prominent pharma names like Dr Reddy's, Cipla, Lupin, Aurobindo Pharma, and Sun Pharma were down 1-3 percent. Others like Alkem Labs, Ipca Labs, Laurus Labs, and Wockhardt also took a strong hit, tumbling 3-6 percent. Weighed down by these losses, the Nifty Pharma index also slipped close to 2 percent.
NIFTY Pharma Top Stock Losers (Intra-day)
While Trump's broader tariff plans remain unclear, his recent wave of duties over the past month has fueled concerns that his threats may be more than just rhetoric.
If Trump went ahead and imposed tariffs on pharma imports in the US, it could be a huge setback for Indian drugmakers. Tariffs would increase the cost of exporting drugs to the US, potentially reducing margins for Indian pharmaceutical companies like Sun Pharma, Dr Reddy’s, and Cipla, which have substantial exposure in the US generics market.
It could also erode the competitiveness of Indian drugmakers in the US market. Indian drugmakers compete with domestic US drug manufacturers based on their lower pricing, however, higher tariffs could make Indian medicines more pricey and thereby less competitive.
However, even though these concerns loom large, there haven't been any clear details of Trump's imminent plan to impose tariffs on pharmaceutical imports thus far. Without concrete policy announcements, the market reaction remains speculative, and Indian drugmakers continue to monitor the situation closely.
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