Pharma stocks unfazed as US Trump admin launches probe into imported drugs

Shares of major Indian pharmaceutical companies on Wednesday, including Aurobindo Pharma, Sun Pharmaceutical Industries (Sun Pharma), Zydus Lifesciences, Dr. Reddy's Laboratories, Gland Pharma and Lupin, were largely unfazed by reports of a new US investigation into pharmaceutical imports.

According to Federal Register filings released Monday, the Trump administration has initiated a Section 232 investigation under the Trade Expansion Act of 1962, citing national security concerns over the US’s heavy reliance on foreign drug manufacturing. The filings opened a 21-day public comment period.

Sun Pharma declined 0.93 per cent to Rs 1,689.35. About10 per cent of the Sun Pharma's US specialty revenues is formulated in the US, as per some estimates. Zydus Lifesciences fell 0.45 per cent to Rs 880.20. Nomura said Zydus’ US revenues could be at $1.3 billion in FY26 and $1.2 billion in FY27, with very limited production in the US.

Dr Reddys Laboratories edged 0.25 per cent lower to Rs 1,152.90. Products manufactured by Dr Reddy's in the US may contribute less than 15 per cent to FY27 revenues, Nomura estimated.

Aurobindo Pharma Ltd in fact rose 0.40 per cent to Rs 1,139.65. It is the largest Indian generic company with US sales of $1.6 billion in Calendar 2024. Aurobindo Pharma has three manufacturing sites in the US, but the production and contribution from the sites are limited.

Glenmark Pharmaceuticals inched 0.19 per cent lower to Rs 1,372.85. Gland Pharma added 0.13 per cent to Rs 1,428.40.  

The fresh move marks the administration’s latest use of Section 232 to explore sector-specific tariffs aimed at encouraging domestic production of critical goods. Similar investigations into imports of copper, lumber, steel, aluminum, and automobiles have already led to the imposition of tariffs since President Trump's return to office in January.

The US President Donald Trump had earlier indicated that tariffs on imported pharmaceuticals could be imposed in the “not-too-distant future". Earlier, he issued a warning about imposing "never seen before" tariffs on drug imports into the US.
Tariffs have become a cornerstone of President Trump’s economic and national security agenda, with his administration implementing a series of aggressive measures that have raised the average import duty from approximately 2.5 per cent to around 25 per cent within a matter of months, according to economists.