Which Indian companies are likely to be affected if Donald Trump imposes tariffs on pharmaceutical drugs?
America accounts for a third of India's overall pharmaceutical exports. India's exports to the US mostly comprise generics or cheaper versions of popular drugs.
US President Donald Trump has announced that his “long-promised” tariffs on pharmaceutical drugs will be announced very soon.
“We are going to be announcing very shortly a major tariff on pharmaceuticals,” Donald Trump said at a fundraising gala for House Republicans on Tuesday, without providing any additional details.
“Once we do that, they’re going to come rushing back into our country, because we’re the big market,” Trump said. “The advantage we have over everybody is that we are the big market.”
Trump has long bemoaned a lack of domestic pharmaceutical production and has repeatedly promised tariffs to bring more capacity into the country, according to Bloomberg.
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In March, he said that the White House would announce tariffs on pharmaceuticals “at some point in the not too distant future,” pointing out that the US no longer makes medicines.
The latest remarks by Donald Trumps comes days after he announced “reciprocal” tariffs on several countries, leading to a havoc in US and global stock market.
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If announced, the tariffs on pharmaceutical drugs are likely to impact Indian companies that export to the United States.
India's pharma exports to the US mostly comprise generics, or cheaper versions of popular drugs. These currently attract almost no US levies, while India imposes about 10% tax on US pharma imports, reported Reuters, citing industry experts.
Which companies are likely to be affected?
According to Reuters, America accounts for a third of India's overall pharma exports.
Just for the year ended March 2024, Bengaluru-headquartered Biocon and Mumbai-based Lupin earned 44% and 37% of their revenues from the United States.
Laurus Labs, an Indian multinational pharmaceutical and biotechnology company headquartered in Hyderabad, also earned about 17% from the North American market.
According to Reuters, Sun Pharma, India's largest drugmaker, also made 32% of its total revenue through US sales last fiscal year.
In addition to them, firms like Dr Reddy's, Aurobindo Pharma, Zydus Lifesciences, and Gland Pharma reportedly have substantial exports to the United States.
Pharma shares suffer losses
On Wednesday, all twenty constituents of India's pharma index were lower, with the index dragging down the benchmark Nifty 50 by about 0.59% as of 10:50 am IST.
Biocon, Laurus Labs and Lupin were the top losers by percentage, down between 3% and 5%.
Sun Pharmaceutical Industries, Cipla, and Dr Reddy's Laboratories were down between 1% and 2%, according to Reuters.
"This is playing a lot on investors' sentiment and is an overhang until the time when the announcement of the tariffs happens," said Shrikant Alkokar, equity analyst at Nuvama Group.
