Pharma stocks in India declined in early trade on Wednesday after US President Donald Trump announced a phased tariff plan for imported generic medicines. The Nifty Pharma index fell nearly 2% with all its constituents trading in the red.
Lupin, Gland Pharma, Aurobindo Pharma, Ajanta Pharma, Sai Life Sciences and Zydus Lifesciences shares were among the top losers on the Nifty Pharma index, falling more than 2% each.
Piramal Pharma, Alkem Labs, Cipla and Glenmark Pharmaceuticals shares were also among the top losers.
Trump announced a phased tariff plan on imported generic drugs to encourage domestic pharmaceutical manufacturing. Under the proposed framework, generic drugs imported into the US will continue to attract a 0% tariff for two years from August 1. From August 2028, a 100% tariff will be imposed for one year, followed by a 200% tariff thereafter.
In a post on Truth Social, Trump said the policy was aimed at encouraging pharmaceutical companies to establish manufacturing facilities in the US. Companies that fail to relocate production during the transition period would face higher tariffs.
The policy specifically targets generic pharmaceuticals, while tariffs on patented, branded and innovative medicines will remain unchanged under the current framework.
The US is one of the largest export markets for Indian pharmaceutical companies. According to IQVIA data, Indian firms account for around 47% of the US generic drug market.
Analysts believe the proposed tariff structure presents a mixed outlook for Indian pharma companies, many of which derive a significant portion of their revenues from the US generics market.
“While the proposed structure provides a two-year transition window before tariffs increase sharply, shifting generic drug manufacturing to the US remains challenging for Indian companies due to persistent price erosion, intense competition and stringent quality requirements,” said Sunny Agrawal, Head of Fundamental Research at SBI Securities.
Additionally, he highlighted that manufacturing a drug in India is estimated to be 30–50% cheaper than producing the same drug in the US, highlighting the structural cost advantage enjoyed by Indian manufacturers.
Agrawal said the proposed framework introduces uncertainty for Indian pharmaceutical exporters, although it could also be a tactical move by the US to gain leverage in trade negotiations.
Maitri Sheth, Analyst – Pharmaceuticals at Choice Institutional Equities, said the proposal brings generics — one of the key revenue contributors for Indian pharmaceutical companies in the US — within the scope of tariffs for the first time. However, she believes the proposed two-year transition period provides companies with sufficient time to recalibrate their manufacturing footprint and supply chains.
Tushar Manudhane, Senior Vice President and Institutional Research Analyst – Healthcare at Motilal Oswal Financial Services, highlighted the significant difference between the pricing at which products are transferred to US subsidiaries and the prices at which they are ultimately sold in the US market. He said the tariff would presumably be levied on the price at which the product enters the US.
“Nearly 90% of generic prescriptions in the US are imported, effectively increasing tariffs for all suppliers to the US market when the proposed measures take effect. The policy is not India-specific. Moreover, outsourcing to countries such as India is based on a 40–60% lower manufacturing cost compared with the US,” Manudhane said.
He added that even if Indian companies establish manufacturing facilities in the US, setting up a plant could take at least two years, followed by plant inspections and product approvals that could take another 12–15 months. This could significantly delay the impact of any potential shift in manufacturing.
“These factors question the economic viability of setting up manufacturing plants in the US for generics. This effectively means minimal impact on Indian pharma companies supplying medicines to the US market,” Manudhane said.
Impact on pharma stocks
According to Agrawal, companies such as Gland Pharma, Aurobindo Pharma, Lupin, Zydus Lifesciences, Dr. Reddy’s Laboratories, Sun Pharma and Cipla could remain sensitive to tariff-related developments due to their significant US revenue exposure.
However, he said US revenue exposure alone does not provide a complete picture. Aurobindo Pharma appears relatively better positioned due to its significant US manufacturing footprint, alongside Senores Pharmaceuticals. Sun Pharma has also been strengthening its US presence through acquisitions and strategic investments.
In contrast, Dr. Reddy’s Laboratories, Lupin, Cipla and Zydus Lifesciences continue to rely significantly on India-based manufacturing, although their US operations and product mix could help mitigate the impact. Biocon could also remain in focus, given that a significant portion of its biosimilars and generic products are manufactured in India and Malaysia.
Alkem Laboratories and Torrent Pharmaceuticals are expected to face relatively limited impact. Alkem’s US generics business contributes a comparatively smaller share of its overall earnings, while Torrent’s dependence on the US generics market remains modest.
Choice Institutional Equities expects the impact on several companies to remain limited:
Ajanta Pharma: With less than 30% of revenue derived from the US and a largely diversified business across Asia, Africa and India, the impact is expected to be minimal.
Cipla: Around 25% of revenue comes from the US. Its US manufacturing facility and outsourcing arrangements are expected to limit the financial impact.
Dr. Reddy’s Laboratories: With US revenue contributing around 33% and manufacturing operations in the country, the impact is expected to remain manageable.
Glenmark Pharmaceuticals: Around 40% of revenue comes from the US, but its existing manufacturing presence should help mitigate the impact.
Granules India: With approximately 74% of revenue linked to the US, it is considered among the most exposed companies. The company may either pass on higher costs to customers or gradually diversify its revenue mix.
Lupin: Although around 40% of revenue comes from the US, its portfolio is skewed towards complex generics, which should limit the impact.
Marksans Pharma: With more than 50% of revenue generated from the US, its domestic manufacturing and US facility could provide some cushion.
Piramal Pharma: Its multiple manufacturing facilities in the US and continued expansion provide a relatively favourable position.
Sun Pharma: With less than 30% of revenue generated from the US and a portfolio focused on complex generics and specialty products, the potential impact is expected to be limited.
Zydus Lifesciences: Despite around 40% US revenue exposure and predominantly India-based manufacturing, its focus on complex generics should help mitigate the impact.
Analysts said the eventual impact will depend largely on the final structure of the policy and the exemptions granted. Investors are likely to focus on pharmaceutical companies with stronger US manufacturing footprints, diversified revenue streams and greater exposure to complex generics and specialty products.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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