Impact of Trump’s 100% Tariffs on Branded Drugs: Vulnerable Indian Pharma Stocks Analyzed by Experts
US President Donald Trump’s recent decision to impose 100% tariffs on branded and patented pharmaceutical exports has sent shockwaves through the Indian pharmaceutical sector. The United States is a crucial market for Indian pharmaceutical exports, accounting for approximately 35% of the total exports, valued at around $10 billion for the fiscal year 2025. This tariff announcement has led to a decline in stock prices for major Indian pharmaceutical companies, raising concerns about the potential impact on their revenues, particularly for those heavily reliant on the US market.
Impact on Indian Pharma Stocks
The announcement of the tariffs has resulted in a notable drop in stock prices for key players in the Indian pharmaceutical industry. Companies such as Sun Pharma, Cipla, and Dr. Reddy’s have experienced declines of up to 5%. Experts are closely monitoring the situation, especially for firms that derive a significant portion of their revenue from US operations. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, commented on the situation, suggesting that while the immediate impact may be limited for generic drug exporters, there is uncertainty regarding whether the tariffs will extend to generic drugs in the future. Maitri Sheth from Choice Institutional Equities echoed these concerns, highlighting the ambiguity surrounding the potential inclusion of complex generics and specialty medicines under the new tariff regime.
Companies at Risk
Among the companies most affected, Dr. Reddy’s stands out with 47% of its earnings coming from the US market, making it particularly vulnerable to any changes in tariff policy. Analysts project that the company’s US earnings could reach $1.5 billion in fiscal year 2026. Sun Pharma also faces significant risks, with 37% of its revenue linked to the US market, putting $2.1 to $2.3 billion of its earnings at stake. The company’s flagship product, Ilumya, which is produced outside the US, may be directly impacted by the tariffs. However, analysts suggest that Sun Pharma might be able to mitigate some of the tariff effects due to the chronic nature of the therapy.
Cipla appears to be in a relatively better position, with around 30% of its revenue tied to the US market, projected at $900-950 million for fiscal year 2026/27. The company’s manufacturing facilities in the US contribute significantly to its earnings, providing a buffer against potential tariff impacts. Other companies, such as Lupin and Zydus Lifesciences, are also assessing their exposure, with Lupin projecting US revenues of $1.1 billion and Zydus facing challenges due to its high dependence on US sales.
Future Outlook and Exemptions
The pharmaceutical sector is bracing for further volatility as investors await clarity on the scope of Trump’s tariff measures. While the immediate impact on generic drug exports may be limited, uncertainty remains regarding the potential inclusion of complex generics and biosimilars in the tariff regime. Analysts from ICICI Securities have noted that companies with manufacturing plants under construction in the US may be exempt from the tariffs, providing a potential avenue for mitigating exposure.
As the situation unfolds, pharmaceutical companies are preparing for potential declines in stock prices in the coming sessions. The industry is keenly observing whether the tariffs will extend beyond branded medications to encompass the entire $10 billion Indian pharmaceutical export sector. With the stakes high, companies are strategizing to navigate the challenges posed by these new tariff policies while seeking opportunities to safeguard their revenues.
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