Nifty Pharma extends losses for a fifth session as generics players fret over tariff deadline

Shares of pharma companies were under selling pressure on April 1, pushing the Nifty Pharma index down by over 2 percent, marking the fifth consecutive session of losses on worries over the potential impact of US President Trump's reciprocal tariffs set to take effect from April 2.

India's domestic pharmaceutical companies have strong exposure to US, with major portion of their revenue accruing from exports. Currently, US charges nearly zero duty on pharmaceutical imports, while India imposes around 10 percent tax on pharma imports from US. Domestic pharma companies are fearful of any potential impact due to Trump's reciprocal tariffs.

Motilal Oswal, in its latest report, has said that pharma is one of the most vulnerable sectors to US reciprocal tariffs. However, it said that the overall impact of the tariffs on India's economy would be minimal. "Overall, we believe that the impact of reciprocal tariffs (assuming full product-level reciprocity) on India will be limited on a national basis. India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP," MOSL said.

International brokerage Jefferies has however said that India's generic pharma players may escape any serious action by the Trump administration owing to fears of drug price hikes in America, though some players like Zydus and Dr Reddy’s are vulnerable due to higher US exposure.