Trump Hints at Pharma Tariffs

Currently, the US's MFN (most favored nation) or non-discriminatory tariff on medicines is nil, while India charges duties in the range of 0-7.5% on drugs imported into the country, with the recent years witnessing more exemptions or duty cuts for lifesaving drugs.

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Although there is no clarity on the quantum of new US tariff, pharma stocks, which were among the top gainers on Thursday following the exemption from the reciprocal tariff, came under heavy selling pressure on Friday.

The Nifty Pharma index fell 1.03%, marking its biggest single-day drop since July 27, 2021. Barring two, all 18 other constituents of the index ended in the red, with losses of up to 7.21%. Among major pharmaceutical companies, shares of Cipla declined 5.38%, Divi's Laboratories dropped 4.86%, and Sun Pharma fell 3.43%. Laurus Labs, Granules India, and Ipca Labs were the top losers in the sector, each plunging up to 7.21%.

Sources from the domestic pharma industry said that they are monitoring the situation closely. "Given the global uncertainty around tariffs, we cannot speculate about the possible increase in tariffs at the moment. We are in a wait-and-watch mode," said head of a leading pharma association, asking not to be identified.

Another industry association source told FE that the imminent US tariff could affect US healthcare system which is currently facing shortage of generics drugs. "We were expecting some relief from the imposition of reciprocal tariffs as there's a shortage of generics medicines in the US since 2023. India is a major exporter of affordable generics drugs to the US with nearly 47% share in that market," he said.