Currently, the Pharma sector is under exemption from reciprocal tariffs that Trump had announced in the month of April. The sector was being investigated under section 232 by the US Department of Commerce, which has now been completed and the US President has said that tariffs on the sector are “coming soon.”
As of now, India pays zero tariff on export of generic drugs to the US. In case the 25% tariff is applicable on the Pharma sector too, Indian companies have the following options on the table:
- Pass on majority or the entire cost to consumers, which will increase prices
- Reassess their portfolio, and remove unviable products from that
- Manufacturing in the US, but that is unlikely to have any cost advantage for generic drugs.
India’s unbranded generic pharma companies like Sun Pharma, which also reports results today, Dr. Reddy’s Laboratories, Divi’s Laboratories, Cipla, Aurobindo Pharma, Lupin and Biocon could see some pressure in Thursday’s trading session.On the flip side, Indian drugmakers with a domestic-oriented portfolio and focus, such as Eris Lifesciences, Ajanta Pharma, Torrent Pharma, hospital stocks like Apollo Hospitals, Fortis Healthcare, Shalby, Aster DM, along with diagnostic names like Dr. Lal Pathlabs, Metropolis and others, could buck the trend as they do not have any export-oriented portfolio / business model.
The Nifty Pharma index ended little changed on Wednesday and has risen 5% in the last one month, with multiple midcap Pharma names such as Eris, Laurus Labs, hitting new highs.
First Published: Jul 31, 2025 6:35 AM IS
