Pharma stocks rebound as tariff fears ease; Sun Pharma, Lupin, Cipla lead gains

Pharma rebounds, but US tariff overhang persists

The Nifty Pharma index climbed 1 percent on September 29, breaking a five-day losing streak as most constituents traded higher. The rebound followed a sharp sell-off last week after US President Donald Trump announced steep 100 percent tariffs on branded and patented drugs starting October 1, part of its broader push to onshore pharma manufacturing, create jobs, and cut foreign reliance.

Out of the 20 index stocks, 15 advanced, led by Sun Pharma, Lupin, Cipla, Zydus Life, Biocon, Granules India, Torrent Pharma, Laurus Labs, Aurobindo Pharma, and Glenmark Pharma, which gained up to 2 percent.

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Analysts pointed out that since India primarily exports generic drugs to the US, which remain outside the tariff ambit, the recent weakness was largely sentiment-driven. HSBC said only Sun Pharma has meaningful exposure to patented medicines in the US, adding that while the worst-case earnings hit could be 8 to 10 percent by FY27, it maintained a “Buy” call on the stock with a target price of Rs 1,850 per share.

Jefferies also highlighted Sun Pharma and Biocon as the most exposed but noted that generic exports and Indian CRDMO supplies are unlikely to be impacted, even as contradictions with recent trade pacts mean clarity on the tariff structure is still awaited.

According to Pharmexcil, the US accounts for over 35 percent of India’s total pharma exports, valued at $10 billion in FY25. For several leading drug makers, the US remains their largest market, contributing as much as 40–50 percent of revenues.

For example, Dr Reddy’s derives 47 percent of its earnings from the US, while Sun Pharma earns 37 percent. Lupin, Zydus Lifesciences, and Aurobindo Pharma each generate over $1 billion in revenues from the US market alone.

In short, if tariffs are eventually extended to complex generics and specialty medicines, the impact on Indian pharma companies could be significant.

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