Trump tariff, pharma stocks: Ambiguity persists over generics, specialty, says Choice

Choice Broking on Friday said the 100 per cent US tariff on branded and patented pharmaceutical products could negatively impact Indian pharmaceutical exporters, as the US represents the largest market for Indian pharma, accounting for approximately 35 per cent of exports, valued at $10 billion in FY25. 

While the tariff primarily targets branded drugs, Choice Broking said there is ambiguity over whether complex generics and specialty medicines might also be affected, which could pose challenges for companies relying on US exports. 

"However, firms with manufacturing plants under construction in the U.S. will be exempt, offering an opportunity to mitigate tariff exposure," it said.

US President Donald Trump has announced a 100 per cent import tariff on branded or patented pharmaceutical products, effective October 1, 2025. This move aims to bolster domestic manufacturing and reduce reliance on foreign imports.

Trump’s announcement specified that pharmaceutical products would be exempt from the tariff if the company has already begun construction on a U.S. manufacturing facility or if such a facility is currently under development.

Pharmaceuticals were previously exempt from investigations under Section 232. Aurobindo Pharma derives 89 per cent of its revenue from exports, with nearly half (49 per cent) coming from the US. Similarly, US sales account for 46 per cent of Biocon’s revenues. Other major Indian pharmaceutical exporters to the US include Cipla (29 per cent), Dr. Reddy’s Laboratories (46 per cent), Lupin (36 per cent), Sun Pharma (33 per cent), Zydus Lifesciences (48 per cent), and Piramal Pharma (39 per cent), according to a JM Financial note released last month.

“Investor focus shifts to domestic pharma after the Trump Administration announced a 100% tariff on branded pharmaceutical imports from October 1, threatening over $3.6 billion in annual Indian exports to the US. This follows the steep rise in H-1B visa fees, which has already hit IT stocks,” said Ponmudi R, CEO of Enrich Money.