The shares of most pharma companies were under selling pressure on March 25, weighing down the BSE Healthcare index by 0.3 percent on a day of marketwide strength, after US President Trump said he will announce tariffs on automobiles, aluminum and pharmaceuticals in the near future.
"We've been ripped off by every country," Trump said during an interaction with reporters on March 24.
The fall in share prices pushed the Nifty Pharma index down by 0.3 percent in early trade, snapping its six-day winning streak.
Dr Reddy's Laboratories shares plunged nearly 3 percent to trade at Rs 1,175 apiece in the morning, while those of Aurobindo Pharma were also down nearly 3 percent at Rs 1,177 apiece. IPCA Laboratories, Lupin and Granules shares fell over 2 percent each. Other pharma stocks which recorded strong losses included Zydus Lifesciences , Ajanta Pharma, Glenmark, Laurus Labs, Mankind Pharma and Biocon, which were each down over 1 percent. The shares of Divis Labs, Abbott India, Cipla, Torrent Pharmaceuticals, Sun Pharma, Natco Pharma and others were trading in the red with marginal losses.
The shares of Gland Pharma however bucked the trend to trade in the green. The stock was up over 1 percent to trade at Rs 1,627 per share.
Donald Trump reiterated that America will impose reciprocal tariffs on April 2, while calling it a 'Liberation Day' for the US economy. He however noted that the tariffs won't be the same for all countries and grant breaks may be given to a "lot of countries", without mentioning further details.
Trump argued that the tariffs on automobiles, aluminum and pharmaceuticals would generated "astronomical" revenue for the country, which may keep the tax rates low. This comes amid concerns over rise in US inflation as a result of the increasing tariffs.
Earlier in February, Trump had proposed a 25 percent tariff on auto, semiconductor and pharma imports. The US President then delayed the said tariffs, while imposing harsh duties on metal imports.
India's domestic pharmaceutical companies have strong exposure to US, with major portion of their revenue being derived from exports. Trump’s tariffs are expected to have a strong impact on the domestic players.
"We are concerned that distributors and generic manufacturers cannot absorb the rising costs of broad tariffs," the Healthcare Distribution Alliance (HDA) has said in a statement.
Currently, US charges nearly zero duties on pharmaceutical imports. India on the other hand imposes around 10 percent tax on pharma imports from US. India largely exports low-cost generic drugs.
In 2024, India's pharma industry exported drugs worth around $8.73 billion to US, representing nearly 31 percent of its total exports. In the same period, US exported $635.37 million worth of pharmaceuticals to India.
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