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Large finished dosage drug exporters Cipla and Dr Reddy’s Laboratories reported subdued US sales in the June 2025 quarter. Price erosion in a key oncology product — generic Revlimid — weighed on growth rates. The companies expect to offset softness in generic Revlimid revenues by launching and scaling up new products. Even then, investors should keep a wary eye on the US where President Donald Trump is negotiating tariff deals in the run-up to the August 1 deadline for reciprocal tariffs.
After Japan, Trump has struck a trade agreement with the European Union (EU). Under the deal, the US will impose 15 percent on imports from EU, including pharmaceutical products. Earlier Japan also agreed to a principal tariff rate of 15 percent. The tariff rate for the UK is fixed at 10 percent.
The date of tariff imposition can be deferred and is subject to ongoing investigation into pharmaceuticals and semiconductors imports into the US. But EU pharmaceutical products will be subject to 15 percent tariffs, regardless of the investigation outcome and US tariff rates on other countries.
As the US finalises trade deals with other countries, pharma companies will keep a close eye on final tariffs. The US is the biggest export market for Indian drug companies. The EU also exports significant quantities of higher priced branded and innovator drugs to the US and will be able to absorb new tariffs to some extent. However, India mostly exports low-priced generic drugs to the US. Subjecting generic drugs to tariffs can raise costs for all, as we discussed here.
At the global level, investors may be relieved that US President Donald Trump is striking trade deals at lower tariff rates than he initially threatened with. However, as the initial euphoria settles down and companies calculate costs, the reality of tariffs will sink in, warns this piece from The Financial Times, free to read for Moneycontrol Pro subscribers. The US tariffs on the EU are estimated to cost the pharma industry billions of dollars in taxes. After Trump took office, US tariffs on foreign goods rose to the highest level since before the second world war, explains the FT piece. Do read.
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