Pharma stocks tumbled on February 19, with some plunging as much as 10 percent, after U.S. President Donald Trump signalled potential tariffs of around 25 percent on pharmaceutical imports. "It’ll be 25 percent and higher, and it’ll go very substantially higher over a year," he warned, raising concerns about the impact on Indian drug exports to the U.S., the world’s largest pharmaceutical market. Twelve of the 20 stocks on the Nifty Pharma traded lower.
Aurobindo Pharma tumbled 10 percent intraday to hover near 52-week low before recovering most of its losses, while Dr Reddy's Laboratories and Sun Pharma slipped up to 2 percent. Cipla and Lupin were down 1 percent and 2.5 percent, respectively, while Ajanta Pharma dropped over 3 percent in early trade. Zydus Lifesciences also slid 4 percent.
Bucking the trend, Divi’s Laboratories and Torrent Pharma gained nearly 2 percent each. This comes after Macquarie said that the rising CRDMO segment, increased pharmaceutical outsourcing, and regulatory tailwinds could propel growth in the coming years.
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The development gains significance as potential tariffs are likely to create major problems for Indian manufacturers, which are one of the biggest suppliers to the United States. Donaldo Trump’s latest tariff threat—targeting pharmaceuticals, autos, and semiconductor chips—further complicates the global trade picture.
Indian pharmaceutical companies, which supply nearly 40 percent of the generic drugs used in the U.S., face mounting challenges as pricing pressures and regulatory scrutiny continue to weigh on the sector. The proposed tariffs could further squeeze margins, making Indian exports less competitive in the world's largest pharmaceutical market.
Also read: Smallcap, midcap indices gain up to 2% as broader markets outshine Nifty 50
This development comes amid a broader shift in U.S. trade policy, with the Trump administration already imposing new tariffs on Chinese imports and announcing additional duties on steel and aluminium since taking office last month.
If tariffs are imposed, their impact on India could be significant, given the U.S. is India’s largest trading partner, with bilateral trade surpassing $117 billion in 2023. India is especially susceptible to shifts in U.S. trade policy, as the American market remains the largest destination for Indian exports, both goods and services. Of particular importance is the fact that the U.S. is the only country with which India maintains a trade surplus, making it a vital source of U.S. dollar earnings.
At about 11:45 am, Nifty Pharma was trading at 20,816, lower by 0.8 percent from the last close. The Nifty Pharma index has tanked 11 percent since the start of the year.
India's pharma exports to the country stood at $8.73 billion in fiscal 2024 - a nearly 16% increase from previous year - accounting for about 31% of the industry's overall exports, as per data from government-backed trade body Pharmaceuticals Export Promotion Council of India (Pharmexcil).
Pharma stocks have lost about 12% so far this year, while the benchmark Nifty 50 eclined 4%.
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