Pharma shares climbed up to 4% on October 9 after a report said Donald Trump administration isn’t planning to impose tariffs on generic drugs from foreign countries. This move could bring significant relief to Indian pharmaceutical companies.
Nifty Pharma index was trading 0.9% higher on October 9 with Aurobindo Pharma, Lupin leading the gains by rising 4% and 3.4%, respectively.
Dr Reddy's Labs and Zydus Lifesciences shares rose 2% and 1.4%, respectively.
A Wall Street Journal report said that the move to exclude generic medicines from tariffs is not yet final but is being considered seriously. It also added that the decision could change in the coming weeks depending on ongoing internal discussions within the administration.
The Wall Street Journal reported Wednesday that US President Donald Trump's administration was exploring other alternative measures such as federal grants or loans to encourage domestic production of critical generic drugs, aiming to reduce reliance on foreign suppliers, including India.
"The administration is not actively discussing imposing Section 232 tariffs against generic pharmaceuticals," The Wall Street Journal quoted Kush Desai, deputy press secretary of the White House, as saying. Desai said the administration was pursuing "a nuanced and multi-faceted approach to onshore manufacturing of generic pharmaceuticals" to avoid future dependence like that seen during the Covid era, according to the report.
Meanwhile, Lupin shares also snapped their four-day losing streak on the firm's plans for new US manufacturing unit.
The pharmaceutical company plans to build new manufacturing facility in Coral Springs, Florida at a projected cumulative investment of $250 million in new facility for R&D, infra and capital expenditures over five years.
The new site will have capacity to accommodate production of more than 25 critical respiratory medicines and the company will get tax credits, incentives from Florida.
Citi said US investment may help company smoothly navigate geopolitical risks like tariffs.
Choice Institutional Equities, a brokerage firm, anticipates a mixed performance from pharmaceutical companies in Q2FY26. They expect domestic markets to perform better, while growth in the US is likely to slow down.
The firm maintains a ‘Positive’ outlook on the sector, predicting that EBITDA margins will stay relatively stable as companies work on enhancing their product portfolios.
Although there is a potential risk from a proposed US tariff on Indian pharmaceutical imports, the plan is currently paused. Choice believes that even if the tariff comes into effect, most companies they cover will still achieve their FY26 goals due to their strong focus on generic drugs.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
