CHENNAI: Indian pharmaceutical stocks experienced a significant drop on Friday, with the Nifty Pharma Index falling 4.4%, erasing the gains from the previous day. This decline followed U.S. President Donald Trump’s warning about imposing steep tariffs on the pharmaceutical sector. Trump indicated that tariffs on pharmaceuticals could be higher than anticipated, stating, "Pharma (tariffs) is going to be starting to come in, I think, at a level that you haven't really seen before."
The Nifty 50 index, which tracks the broader market, was also down about 1.2% in the early trade. The pharma sector was one of the top losers in terms of percentage, with all 20 stocks in the index trading lower. Major pharmaceutical companies such as Sun Pharma, Dr. Reddy's, and Cipla were the biggest contributors to the losses.
Lupin, Aurobindo Pharma, and Ipca Laboratories also saw significant declines, with their stocks falling approximately 6.5%, marking them as the biggest percentage losers.
Earlier this week, Trump had imposed a 10% tariff on a wide range of U.S. imports, including many goods from rivals and allies, but temporarily exempted pharmaceuticals from these tariffs. This temporary exemption had initially provided some relief to major pharmaceutical exporters like India, Japan, and Ireland, allowing their stocks to rally on Thursday.
Indian Pharmaceutical Association (IPA) had on Thursday said that the pharma tariff exemption (in Trump's reciprocal tariffs) will boost India-US trade ties.
However, analysts and industry executives while talking to media warned that the situation might not remain positive for long, as the imposition of tariffs on pharmaceuticals still seemed likely.
Reuters on Friday quoted Vishal Manchanda, an analyst at Systematix Institutional Equities, saying that if these tariffs were enforced, pharmaceutical manufacturers would likely have to pass on the higher costs to consumers, which could impact the industry. Additionally, Indian drugmakers had expressed concerns about the difficulty of setting up manufacturing operations in the U.S., which could lead to increased production costs.