Decline in pharma stocks today due to Trump tariff is largely ‘sentimental’

While Sun Pharma, the heaviest stock on Nifty Pharma, fell as much as 5%, Laurus Labs declined the most—about 6%. Biocon was down about 4.6%

The decline in pharma stocks due to US President Donald Trump's 100% tariff on imports of branded drugs is largely sentimental, according to analysts.

The share prices of Indian pharma companies were hit on Friday after Trump's 100 per cent tariff announcement. (Representational Photo/PTI)

The Nifty Pharma index fell 2% on Friday after Trump announced that tariff on branded and patented drugs would come into effect from 1 October. Of the 20 index constituents, 18 traded in the red. Only two — Ipca Laboratories Ltd. and Torrent Pharma — were higher by as much as 1.5%.

Analysts described the decline as “sentimental”, noting that while the US is Indian pharma's largest export market—accounting for a third of total global volumes—they are mostly generic drugs that may not be affected by tariffs.

Sun Pharmaceutical Industries Ltd., India's largest drugmaker by revenue and the heaviest stock on the index, fell about 3%. The billionaire Dilip Shangvi founded company markets patented drugs, including Ilumya, a psoriasis treatment approved by the US Food & Drug Association.

The company also has a contract manufacturing unit through EU partners for specialty drugs, where a 15% tariff applies to EU exports to the US, according to Vishal Manchanda, equity analyst at Systematix Group. “The impact on Sun is not very meaningful,” he said. “It may be between 1% to 3% of EBITDA.”

"There is a general worry that contract drug manufacturing organisations might be impacted as the US moves manufacturing in-house," Manchanda said.

Biocon Ltd., which makes complex biosimilars for cancer treatment and has significant US exposure, is down about 4.6%.

“Uncertainty remains whether complex generics and biosimilars will face future tariffs,” ICICI Securities analyst Pankaj Pandey said in a note.