Pharma stocks swallow Trump’s bitter tariff pill

100% duty on branded drugs; Indian generics face threat

- MANU KAUSHIK & KISHOR KADAM

DOMESTIC PHARMA STOCKS fell up to 7% on Friday, in what is seen as a knee-jerk reaction to US President Donald Trump’s statement on Thursday, imposing 100% tariff on branded and patented pharmaceutical imports.

The tariff will apply to companies lacking operational or under-construction manufacturing facilities in the US, effective October 1.

Industry executives and analysts, however, said India’s exports of medicines to the world’s largest economy—in excess of $10 billion annually at present—may not face any major hindrance due to the latest move by Trump.India’s pharma exports are predominantly generics, which are excluded from the levy, they noted.

Some of the large companies such as Sun Pharma, Dr Reddy’s and Lupin have manufacturing facilities in the US, where they make branded generics which are sold over the counter. Novel drugs are supplied to the US by firms in Germany, Ireland and Switzerland.

However, there are concerns that fresh tariffs could be levied on generics too. Besides, some companies, especially the smaller ones, may face queries by the US Customs as even generic drugs are sold with labels of manufacturers, which could be construed as branding.

The US tariff may have implications for Indian firms that supply key ingredients to suppliers of branded generics in the US market, including some European firms under contractual assignments.