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US tariff jitters rock pharma stocks; Sun Pharma, Lupin, Dr Reddy's slump 2-4%

Aside from reciprocal tariffs, US President Trump has teased imposing tariffs on several import heavy sectors, including pharmaceuticals.

February 14, 2025 / 15:13 IST
Nifty Pharma slipped nearly 3 percent to become the worst performing index in trade today.

Share of pharma companies saw red on February 14 as caution over the possibility of US tariffs hitting the sector spread across the Street. This came after US President Donald Trump told reporters Thursday he would also levy tariffs on foreign cars, semiconductors and pharmaceuticals in addition to his plans of imposing reciprocal tariffs.

Caught amidst tariff concerns shares of India's prominent drugmakers--Dr Reddy's Laboratories, Sun Pharma, Lupin, Cipla, Zydus Life and Aurobindo Pharma--slipped 1-4 percent. These companies have a relatively high exposure to the US drug market and higher tariffs on imports threaten to squeeze their margin and eat away pricing competitiveness.

Other drugmakers like Granules India, Natco Pharma, Laurus Labs, Glenmark, Mankind Pharma, Biocon and Divi's Labs also shed 2-9 percent, weighing on the broader pharma index. As a result, the Nifty Pharma index tanked around 3 percent to emerge as the worst performing sector in trade today.

NIFTY Pharma Top Stock Losers (Intra-day)
CompanyCMPChg(%)Volume
Laurus Labs547.30-8.946.34m
Natco Pharma891.85-8.537.55m
Granules India511.65-5.641.15m
Glenmark1,333.05-5.541.31m
Lupin1,964.05-4.441.25m
Zydus Life904.15-4.1887.10k
Mankind Pharma2,399.60-4.06754.11k
Aurobindo Pharm1,136.40-3.691.09m
Biocon349.55-2.712.56m
Divis Labs5,852.00-2.64239.62k
Sun Pharma1,705.05-2.361.46m
Dr Reddys Labs1,197.25-2.15907.44k
Torrent Pharma3,020.35-1.75264.44k
Alkem Lab4,649.85-1.48194.61k
Ipca Labs1,470.00-1.41.11m
Abbott India27,970.40-1.378.39k
Gland1,463.00-0.8960.41k
Cipla1,460.10-0.821.33m
JB Chemicals1,679.50-0.25103.22k

If Trump were to impose tariffs on pharmaceutical imports to the US, it could deal a significant blow to Indian drugmakers. The added costs would make exporting drugs to the US more expensive, potentially squeezing profit margins for major Indian pharmaceutical companies like Sun Pharma, Dr Reddy’s, and Cipla, all of which have substantial exposure in the US generics market.

Additionally, such tariffs could weaken the competitive edge of Indian drugmakers in the US. These companies rely on cost efficiency to compete with domestic US manufacturers, but higher tariffs could drive up prices, making Indian medicines less attractive and diminishing their market share.

Aside from tariff concerns, a slew of weak quarterly earnings from names like Natco Pharma, Granules India, Biocon and others, have also dampened sentiment for the sector.

Last month, Trump also froze foreign aid funding for HIV medicines to Africa, giving another blow to Indian drugmakers supplying antiretroviral (ARV) medications.

He halted all US foreign assistance—except for Israel and Egypt—for at least 90 days to reassess existing programs. This includes the President's Emergency Plan for AIDS Relief (PEPFAR), which provides ARVs to around 50 countries, half of them in Africa. According to US think tank Brookings, HIV-related spending accounted for 44 percent of total US global health funding in FY24, making the freeze a significant setback for global HIV treatment efforts.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Vaibhavi Ranjan
first published: Feb 14, 2025 02:58 pm

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