Indian pharmaceutical stocks could come under pressure after former U.S. President Donald Trump reiterated plans to impose tariffs on pharmaceutical imports. At a dinner hosted by the National Republican Congressional Committee on Tuesday, Trump said, “We’re gonna tariff our pharmaceuticals … we’re going to be announcing very shortly a major tariff on pharmaceuticals.” The statement adds to investor concerns around the broader tariff wave targeting foreign goods.
Trump’s comments come in the backdrop of the U.S. implementing a massive 104% tariff on certain Chinese products starting Wednesday. While no specific details have been announced on pharmaceutical tariffs yet, Indian pharma firms — which are major generic drug exporters to the U.S. — are seen as vulnerable to potential duty hikes.
According to estimates by CLSA, Indian pharma majors such as Dr. Reddy’s, Aurobindo Pharma, Zydus Lifesciences, Lupin, Sun Pharma, and Cipla could see significant earnings erosion under higher tariff scenarios. For example, a 30% tariff could lead to earnings hits ranging from 24% to 45% across these firms. At a 40% tariff, the downside could widen to as much as 80% for Aurobindo and up to 47% for Zydus, the brokerage notes.
CLSA, however, maintains that the likelihood of very high tariffs on Indian pharma exports is low. Indian drugmakers are integral to the U.S. healthcare ecosystem, contributing an estimated 46% of total generic savings in the country. With such a large stake in maintaining affordable drug supplies, any tariff implementation may be tempered by pragmatic concerns around healthcare inflation and supply security.
Still, in the short term, the threat of tariff escalation could weigh on sentiment across Indian pharmaceutical counters. Investors will likely monitor further policy signals from the U.S., especially in the lead-up to the presidential election, for clarity on the trade trajectory with India’s pharma sector.
