On Wednesday, shares of Indian pharmaceutical companies fell by 2%, reaching their lowest point in seven months. This happened after U.S. President Donald Trump announced he wants to impose tariffs of about 25% or more on drug imports from other countries.
Out of 20 pharmaceutical stocks, 12 were down. India’s largest drugmaker, Sun Pharma, saw its shares drop by 2%, while Dr. Reddy’s shares fell by 4%, touching their lowest price since June. Aurobindo Pharma had a bigger hit, falling 6% to its lowest level in almost a year, and Cipla, the third-largest drugmaker in India, lost 2.2%.
The index slightly improved later and was down 0.7% as of 10:44 a.m. IST. Indian drug companies make a large part of their money from the U.S., which is the biggest buyer of Indian drugs. In the last fiscal year, India exported $8.73 billion worth of drugs to the U.S., a 16% increase from the previous year, making up about 31% of the entire industry’s exports, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil).
Many investors are worried because these companies depend heavily on U.S. sales. Shrikant Akolkar, a pharma expert at Nuvama Institutional Equities, explained that Trump’s tariff plans make the future uncertain for these companies. On Tuesday, Trump told reporters that tariffs on pharmaceuticals and semiconductor chips will start at 25% and could increase further, although he didn’t say when this would take effect.
Trump also mentioned he wants to give companies time to open factories in the U.S. so they can avoid these tariffs. However, Akolkar said that building new factories and getting the necessary approvals will take a long time, and operating in the U.S. is more expensive than in India due to higher labor costs.
Earlier this week, Sun Pharma’s Managing Director, Dilip Shanghvi, said that if these tariffs happen, customers will ultimately pay the price. So far this year, pharma stocks have lost around 12% in value, while the main stock index Nifty 50 has decreased by 4%.
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