Nifty Pharma Plunges on US Tariff Fear: Drugmakers Brace for 100% Import Duties

Nifty Pharma Plunges on US Tariff Fear: Drugmakers Brace for 100% Import Duties​

Pharmaceutical Stocks Tumble Amid Trump’s Staggered Tariff Plan​

The Nifty Pharma index emerged as the worst-performing sectoral index in early trade on Wednesday, falling nearly 2 percent. This decline was triggered by the announcement of a phased tariff plan for generic medicines by US President Donald Trump. The move has immediately raised concerns over the long-term viability and revenue outlook for Indian drugmakers who rely heavily on the US market.

The Nifty Pharma index registered a steep drop of 1.7 percent, settling at 25,650.10. This significant selling pressure was part of a broader weak trading session across the indices. The Sensex declined by 390.62 points (0.5 percent) to reach 77,079.49, while Nifty lost 100.95 points (0.42 percent) at 24,086.75 as of 09:16 am IST.

Key Losers and Market Sentiment​

The sell-off was broad across the pharmaceutical sector pack, with several major names under pressure. Aurobindo Pharma led the losses for the sector, falling by 2.6 percent. Glenmark Pharma and Zydus Lifesciences also saw declines of around 2.5 percent each. Cipla and Lupin slipped over 2 percent in early trade.

Among the Nifty 50 constituents, Sun Pharma, Cipla, and Dr Reddy's Laboratories featured prominently among the top losers, shedding between 1.5 to 2 percent following the tariff announcement. This reaction underscores the immediate pressure created by the proposed policy on Indian drug manufacturing capabilities.

Unpacking Trump’s Staggered Tariff Regime​

President Trump had outlined a detailed staggered tariff regime for generic medicines imported into the US on Tuesday. The plan includes an initial two-year period of zero tariffs, starting August 1, 2026. During this period, import duties will subsequently escalate to 100 percent from August 1, 2028.

The policy dictates that import duties will then double to 200 percent one year after the initial increase. In a post on Truth Social, Trump stated that the purpose of the plan is to encourage pharmaceutical companies to establish manufacturing facilities within the US. Companies failing to meet these requirements would face penalties.

Long-Term Impact and Industry Concerns​

The announcement immediately put intense scrutiny on Indian pharmaceutical giants like Sun Pharma, Dr Reddy's Laboratories, Cipla, Lupin, and Aurobindo Pharma. These companies hold substantial market presence in the US generics space, making the proposed tariff roadmap a critical strategic consideration for their future investments.

Industry experts cautioned that pivoting manufacturing to the US would face enormous cost barriers. Priyanka Chigurupati, Executive Director at Granules India, noted during an interview with CNBC-TV18 that producing generic medicines in the US is significantly more expensive than maintaining operations in India. She estimated that transferring production to American facilities could escalate manufacturing costs by 25 to 30 percent.

Chigurupati further emphasized the difficulty of the timeline, stating that a two-year transition period was "extremely short" given the complexity of products supplied globally. While Granules operates existing US facilities, she added that drug prices would need to rise by 50 to 70 percent for large-scale generic production in the country to be economically viable.