Tariffs on generic drugs were always unlikely, exemption makes sense for all: Pharma Analyst

Pharma stocks were buzzing in trade on Thursday, October 9, after a Wall Street Journal report said the Donald Trump administration is not planning to impose tariffs on generic drugs imported from foreign countries. The development eased concerns among investors and companies with large exposure to the US generics market.Speaking to CNBC-TV18, Vishal Manchanda, Pharma Analyst at Systematix Group, said the decision was in line with expectations and logical from both a policy and business standpoint. “The probability of tariffs being imposed on generic pharmaceuticals was low, and it’s panning out along the same lines—generic pharmaceuticals have been exempted,” he said.

Manchanda added that imposing such tariffs would have hurt both American consumers and Indian manufacturers. “It makes sense for everyone—it makes sense for US consumers, and it also makes sense for Indian players. Had tariffs been imposed, a large part of the burden would have fallen on Indian players, who would have had to pass that on to the US market,” he explained.

The US has been increasingly vocal about its reliance on foreign manufacturing for pharmaceuticals and active pharmaceutical ingredients (APIs). However, with generics accounting for nearly 90% of total drug volumes in the US, analysts believe any tariff action could have significantly disrupted the healthcare supply chain and raised costs for patients.Manchanda said Indian companies such as Aurobindo Pharma, Dr. Reddy’s Laboratories and Lupin have the highest exposure to the US generics market. He noted that Aurobindo is likely to benefit the most from a stable trade environment, given its strong presence across multiple generic categories.

While regulatory scrutiny continues to weigh on sentiment, Manchanda said inspections and compliance challenges are part of the normal cycle for the sector. “We see a smooth run for a few months or a few quarters, and then inspections come in, spoiling the mood around the sector. I think we’re in a similar phase now,” he said.

Watch accompanying video for entire conversation.