Trump doubles down on tariffs

US levies on drug exports may cost Indian firms $2.25 billion

- 

The sword of import tariffs wielded by US President Donald Trump has sent investors and markets scurrying for cover across the world and across industries. On Wednesday, it was the turn of the pharmaceutical industry.

Trump's indication to impose 25% tariff on pharmaceutical imports into the US sent the Nifty pharma index slumping 3% in early trade, although it recovered to close about 0.7% lower on Wednesday slumped: Stocks of large generic drug manufacturers Aurobindo Pharma, Dr. Reddy's, Zydus Lifesciences and Sun Pharmaceuticals, which have strong presence in the US, slipped by up to 9.5%, 5.8%, 4.8% and 3.2%, respectively, in intra-day trading.

The uncertainty was fuelled by the heavy dependence on US exports for top Indian drug makers, which garner anywhere between 30% and 50% of their revenues from the American market. Also, the US is India's largest export market for pharmaceuticals. In FY24, of the country's overall pharma exports of $27.9 billion, $8.7 billion or 31% were to the US, according to industry body Pharmexcil (Pharmaceuticals Export Promotion Council of India).

Trump on Tuesday said he was considering imposing tariffs "in the neighbourhood of" 25% for automobiles and at least that for semiconductors and pharmaceutical products.

He further indicated that tariffs would go "very substantially higher" for chips and drugs over the course of the year.

While he said more details would be provided for auto tariffs after 2 April, he did not specify a timeline for pharmaceuticals.