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Stocks in the Nifty Pharma index were down by as much as 10% following US President Donald Trump’s proposal to impose tariffs; Here’s what you should know
Pharma Shares Decline Today
Stocks in the Nifty Pharma index were down by as much as 10% following US President Donald Trump’s proposal to impose tariffs on auto, pharma, and chip imports to the US, set to take effect in April 2025.
Three of the top five losers in the Nifty 50 were pharmaceutical stocks. Dr. Reddy’s Laboratories saw the biggest drop, falling 2.71% to Rs 1,165, making it the major loser on the index. Sun Pharma followed with a 2.15% decline to Rs 1,664.95 during morning trading hours. Cipla dropped 1.72%, reaching Rs 1,456.65.
Sun Pharma and Dr. Reddy’s were among the key contributors to the Nifty’s decline in early trade. Other pharmaceutical stocks also experienced significant losses, with Aurobindo Pharma down 9.5% to Rs 1,052.70, Lupin falling 6% to Rs 1,892.75, and Zydus Lifesciences dropping 6.5% to Rs 855.10.
Why Are Pharma Stocks Declining?
India’s stock market is feeling the impact of US President Donald Trump’s recent threat to impose a 25% tariff on imported drugs, cars, and semiconductor chips starting April 2. Indian pharmaceutical companies like Dr. Reddy’s Laboratories, Lupin, Cipla, and Zydus are more vulnerable to this move than automakers.
While only 0.2% of India’s car exports go to the US, according to SBI Research data, the 25% tariff could have a more significant effect on Indian drugmakers, who export over 38% of their products to the US. As a result, pharma stocks dropped by as much as 5% in early trading on February 19.
Currently, India imposes a 10% duty on medicines imported from the US. If the Trump administration retaliates with a 10% duty on India’s drug exports, it could reduce earnings estimates for FY26 by 6.5% for companies like Dr. Reddy’s, Lupin, and Cipla, according to a report from multinational brokerage Nomura on February 15.
However, Sun Pharma and Torrent Pharma are likely to be less affected due to their lower reliance on US generics sales, the report added.
Trump’s tariff threat comes ahead of a scheduled bilateral meeting between US and Indian officials. Sources told CNBC-TV18 that India’s Ministry of Commerce has a meeting planned to discuss automobile tariffs. Additionally, government sources hinted that Tesla might begin selling affordable electric cars priced under $25,000 in India as early as April.
Despite the tariff uncertainty, Pratik Gupta, CEO and Co-Head of Kotak Institutional Equities, expressed confidence in the pharma sector, stating, “We still like the pharma sector despite the US tariff uncertainty,” in an interview with CNBC-TV18 on Wednesday.
