Pharma stocks traded lower on Friday, 24 July, after US President Donald Trump unveiled a phased tariff plan on imported generic medicines, raising concerns over the outlook for Indian drug exporters.
Abbott India shares were the biggest laggards, falling 3.69% on the BSE. Akums Drugs & Pharmaceuticals shares also witnessed notable selling pressure, slipping 2.06%, while Acutaas Chemicals shares declined 1.99%, and Aarti Drugs shares fell 1.76%. Shares of Alembic dropped 1.61%, Ajanta Pharma lost 1.43%, and Artemis Medicare Services declined 1.32%, reflecting weakness across the broader pharma pack.
Under the proposed policy, generic drugs imported into the US will continue to attract zero tariffs for two years from 1 August. Beginning August 2028, imports will face a 100% tariff for one year, which will increase to 200% from August 2029.
In a post on Truth Social, Trump said the move is aimed at encouraging pharmaceutical companies to shift manufacturing to the United States. Companies that fail to relocate production during the transition period could face the higher tariffs. The proposal applies only to generic medicines, while patented, branded and innovative drugs will continue under the existing tariff framework.
The US is the largest overseas market for Indian pharmaceutical companies, with IQVIA data showing that Indian drugmakers account for nearly 47% of the US generic medicines market.
Param Desai, Research Analyst at PL Capital, said the announcement was largely unexpected and that significant uncertainty remains around how the tariff policy will eventually be implemented. He noted that although generic drug imports will continue to enjoy zero tariffs until August 2028, the proposed sharp increase thereafter could weigh on sentiment.
Desai said several Indian pharmaceutical companies already have manufacturing facilities in the US, which may partly cushion the impact. However, he added that a two-year transition period is unlikely to be sufficient for companies to relocate their entire generic drug manufacturing value chain.
He also pointed out that the proposed tariffs would take effect near the end of Trump’s current presidential term, making their long-term implementation uncertain. In the near term, Desai expects a negative reaction in pharma stocks, particularly among large-cap generic drug manufacturers, until greater policy clarity emerges.
Nifty Pharma today
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty Pharma Index has corrected by around 2% from its recent high of 26,136, recorded on 16 July, following the announcement of proposed US tariffs on imported generic medicines, effective from August 2028. He noted that the index appears to have largely priced in the news.
Shah said the index witnessed buying interest at lower levels, although the rebound lacked strong momentum. Technically, the index is trading marginally below an upward-sloping trendline connecting the swing lows of 21,150 (2 April) and 24,035 (17 June), and has also slipped slightly below its 20-day exponential moving average (EMA). He added that the Relative Strength Index (RSI) has fallen below the 60 mark, indicating a temporary loss of momentum.
However, Shah believes it is premature to conclude that the current correction marks the beginning of a broader trend reversal. According to him, the 25,300-25,250 zone is the immediate support for the Nifty Pharma Index, and as long as it holds above this level, the broader bullish structure is likely to remain intact. On the upside, he identified the 25,700-25,750 zone as the immediate resistance, adding that a decisive breakout above this range could signal a resumption of the prevailing uptrend.
Technical view on Pharma stocks
Hitesh Rathi, Technical Analyst – Equity & Derivatives at Angel One, said Abbott India has underperformed the broader pharma sector this year, but its technical structure is showing early signs of improvement. He noted that consecutive Bullish 100% Pole formations on the daily 0.25% × 3 Point & Figure chart, along with a Follow-through Buy signal above the 10-column moving average, indicate that buying interest is gradually strengthening. Rathi added that the bullish outlook is further supported by a Bullish Swing Breakout on the daily 1% Renko chart after the stock established a strong base near the ₹25,300 level. He expects Abbott India to strengthen further and potentially move above ₹30,000 over the medium term.
On Ajanta Pharma, Rathi said the stock continues to trade in a confirmed primary uptrend, marked by a pattern of higher highs and higher lows, with the broader trend remaining firmly bullish. He highlighted that the stock has recently confirmed both a Rounding Bottom and a Cup and Handle breakout on the daily 3% Renko chart, signalling the likelihood of a continuation of the prevailing uptrend. While the stock has seen some profit booking, Rathi said it appears to be in line with broader market weakness rather than any deterioration in fundamentals or technicals. He believes any correction towards the ₹3,300-3,200 zone could offer a favourable opportunity to accumulate the stock, with a medium- to long-term target of around ₹3,700.
Further, Rathi said Alembic continues to exhibit a weak technical setup, with the stock trading in a broad sideways-to-negative trend despite recovering a significant portion of the losses seen earlier this year. He noted that while recent price action has improved, it has yet to translate into a meaningful trend reversal on the higher-timeframe charts.
Rathi said the stock faces a strong falling trendline resistance in the ₹93-95 zone on the daily 1% Renko chart, and a decisive breakout above this level is essential for any meaningful improvement in the technical outlook. He added that a sustained move above the ₹98-100 range would confirm a Bullish Two-Back formation on the daily 3% Renko chart, providing stronger confirmation of a potential trend reversal. Until these resistance levels are breached convincingly, Rathi believes the stock’s broader technical bias is likely to remain neutral to mildly negative.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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