Pharma Stocks Today: India’s pharmaceutical sector dipped notably on Wednesday after US President Donald Trump outlined a phased tariff plan on imported generic medicines, fuelling concerns over the long‑term outlook for drugmakers that rely heavily on US sales.
The announcement triggered a selloff in Indian pharmaceutical companies, which are among the largest suppliers of affordable generic medicines to the US.
The Nifty Pharma index fell nearly 2 per cent in early trade, making it the worst‑performing sectoral index on the National Stock Exchange in early trade.
The Nifty Pharma index fell 1.85 per cent to 25,610 against Nifty, down 169 points or 0.70 per cent at 24,017.
Trump has outlined a staggered tariff regime for generics, under which imports would remain duty‑free for two years from August 1, 2026, rise to 100 per cent from August 1, 2028, and then to 200 per cent a year later.
Two-year window too short
Param Desai, Research analyst – PL Capital, said that the announcement was largely unexpected, and there is still considerable ambiguity around how these tariffs will actually be implemented.
Generic drugs entering the US will continue to attract a 0% tariff until August 1, 2028, after which tariffs are proposed to increase to 100% from August 2028 and 200% from August 2029. Several generic pharma companies already have manufacturing facilities in the US, which could partially mitigate the impact.
“However, a two-year window appears too short to relocate the entire generic pharmaceutical value chain to the US. Trump’s term ends in January 2029, while the major tariff impact begins from August 2028, so the eventual implementation remains uncertain if there is a change in administration. We could see a knee-jerk negative reaction in pharma stocks today, particularly among large-cap generic players, until there is greater clarity on the policy,” Desai noted.
Minimal impact on Indian pharma companies
Tushar Manudhane, Senior Vice President, Institutional Research Analyst – Healthcare, Motilal Oswal Financial services, added that multiple Indian companies have subsidiaries in US and there is considerable difference in the pricing at which goods are transferred to US market and then subsequently sold in US market. The tariff is presumably at pricing at which it enters US market.
“Secondly, 90% of generic prescription is imported by US, effectively increasing the tariff for everyone (as and when it happens) supplying to US market and it is not India specific,” Manudhane said.
“Also, the concept of outsourcing to countries like India is based on 40-60% lower cost of manufacturing in India compared to that in US. Tariff implementation would still fall short and would not lower this advantage of low cost manufacturing from India.”
“Even if the manufacturing plant is set up (which itself takes 2 years atleast), it would be required to undergo plant inspection and subsequent product approval cycle of atleast 12-15M, further prolonging any competition to kick in.”
Manudhane added that the above mentioned factors questions the economic viability of setting up a manufacturing plant in US for generics.
“This effectively would mean minimal impact on Indian pharma companies supplying medicines to US market.”
The policy aims to encourage pharmaceutical manufacturing to shift to the United States.
