Pharma stocks slide as Trump's 100% generic drug tariff plan spooks investors

Synopsis

Indian drug shares declined Wednesday following US President Trump's tariff announcement. These proposed tariffs will significantly impact companies with substantial US revenue exposure. Analysts suggest investors should now focus on domestically oriented Indian pharmaceutical firms. The Nifty Pharma index saw a notable decrease, while the benchmark Nifty 50 also fell. Negotiations are expected given India's vital role in supplying affordable medicines to the US.

Mumbai: Shares of generic drug manufacturers in India fell Wednesday after US President Donald Trump said such medicines imported into the country would face 100% tariffs from August 2028 onward, and double that the next year.

Analysts said firms with US exposure to their revenues would feel the biggest impact from the change, and investors should now look at domestic focused companies.

Nifty's Pharma index fell 1.3% at close, while the benchmark Nifty 50 declined 0.8%. Among stocks, Lupin fell the most, down 4.3%, followed by Piramal Pharma, Ajanta Pharma, Aurobindo Pharma, Alembic Pharmaceuticals, and Granules (India) which declined between 2.5% and 4.2%.

Also read: Explained: What Donald Trump's up to 200% pharma tariffs mean for Indian investors

"The tariff development is negative for Indian pharma companies, as most continue to manufacture drugs in India despite having US facilities," said Arijit Malakar, equity research analyst, Ashika Stock Broking.

"Expanding US manufacturing capacity would raise production costs, with much of the increase likely passed on to customers," Malakar said.

Others maintained that the tariffs may not have a significant immediate impact.

No Done Deal Yet

Prathamesh Masdekar, research analyst, StoxBox, said the move is still at a preliminary stage, and he expects further negotiations given India's critical role as a supplier of affordable generic medicines to the US.

The pharma sector has been one of the recent outperformers compared with the benchmark Nifty 50. So far in 2026, the Nifty Pharma index is up 13.3%, while the Nifty 50 is down 8.2%.

Maitri Sheth, research analyst, Choice Institutional Equities, said that the proposal brings generics-one of the key revenue contributors for Indian pharmaceutical companies in the US-within the scope of tariffs for the first time.

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