Nomura has expressed concerns about the US tariff threat impacting Indian pharmaceutical companies, noting that the pharma index is down 12.9%, significantly underperforming the broader market (Nifty down 4%).
According to Nomura:
- Large generic companies in its coverage generate $700-$1100 million in revenue from generic product imports into the US.
- A hypothetical 10% tariff on these imports could lead to a 4-15% EBITDA impact, with Zydus, Lupin, and Dr. Reddy’s being the most affected, while Sun Pharma and Cipla would be relatively less impacted.
Despite the potential downside, Nomura remains positive on long-term growth prospects and retains Buy ratings on:
- Zydus
- Lupin
- Dr. Reddy’s
- Cipla
The brokerage advises investors to navigate short-term volatility, keeping in view the strategic importance of Indian generics in the US healthcare system.
