Shares of Dr. Reddy’s Laboratories Ltd dropped nearly 2% to ₹1,269.70 in early trade on Wednesday, reacting sharply to the overnight announcement by former U.S. President Donald Trump regarding the imposition of 25% tariffs on Indian exports to the United States. The move includes a yet-unspecified penalty for India’s continued energy and defense dealings with Russia.
The stock was among the worst-hit in the pharmaceutical space as investors digested the potential impact on generic drug exports, which constitute a major portion of India’s pharmaceutical trade with the U.S.
Pharma Exports at Risk?
The United States is a critical market for Indian drugmakers. In fact, Dr. Reddy’s derives 46% of its revenue from the U.S., making it highly sensitive to any changes in trade policy. While pharmaceuticals are currently exempt from the reciprocal tariff list (announced in April), officials from the White House confirmed to CNBC-TV18 that these exemptions may soon be lifted.
The Department of Commerce’s Section 232 investigation into Indian generic drug exports has now concluded, and according to Trump’s latest statement, tariffs on pharma “are coming soon.”
Currently, India pays zero tariffs on generic drug exports to the U.S. If the proposed 25% tariff is applied to this sector, Indian companies may have to choose between:
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Passing the cost onto U.S. consumers, making Indian generics less price-competitive
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Reevaluating U.S. portfolios, withdrawing lower-margin or loss-making products
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Manufacturing in the U.S., which may offer no cost advantage for generics
Broader Impact Across the Pharma Space
Besides Dr. Reddy’s, stocks likely to remain under pressure include:
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Sun Pharma (33% U.S. exposure)
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Aurobindo Pharma (45%)
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Gland Pharma (53%)
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Divi’s Laboratories
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Cipla, Lupin, and Biocon
Who Might Buck the Trend?
Pharma firms and healthcare providers with a domestic business focus or minimal U.S. exposure may remain resilient:
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Ajanta Pharma, Eris Lifesciences, Torrent Pharma
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Apollo Hospitals, Fortis Healthcare, Aster DM
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Diagnostics players like Dr. Lal Pathlabs, Metropolis
Final Word
Though Indian pharma exports are not yet officially included in the tariff list, Trump’s statements have created uncertainty for the sector. Until there is clarity from the U.S. Trade Representative or India’s Commerce Ministry, investor sentiment around high U.S.-exposed pharma names may remain volatile.
