Despite limited direct impact, Indian pharmaceutical stocks fell sharply on Friday
US President Donald Trump announced that America will impose a 100% tariff on branded pharmaceutical products entering the country starting October 1, though India’s fast-growing pharma exports to the United States are likely to be spared much of the financial impact given that most Indian exports are generic drugs rather than patented products.
“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump declared in a Truth Social post on Friday.
The president clarified that “IS BUILDING” would be defined as “breaking ground” and/or “under construction,” with no tariffs applying to pharmaceutical products if construction has started.
Later, a White House official told Reuters that the tariffs do not apply to countries that already have negotiated trade deals.
Despite the limited direct impact, Indian pharmaceutical stocks fell sharply on Friday as investors grappled with both relief over exemptions and uncertainty about future policy shifts. Analysts described the decline as “sentimental,” noting that India’s exports to the US are primarily generic medicines which remain exempt from the tariffs.
Wockhardt Ltd tumbled 9.40%, Laurus Labs declined about 6%, Indoco Remedies fell 5.35%, and Zydus Lifesciences dropped 4.21%. Sun Pharmaceutical Industries, India’s largest drugmaker by revenue, fell about 3% despite having limited exposure to the tariffs.
Biocon, which makes complex biosimilars for cancer treatment and has significant US exposure, declined about 4.6%.
The BSE Healthcare index dropped 2.14% to 43,046.69. The benchmark Sensex index dipped nearly 1%.
“While the announcement stirred sharp falls in pharma stocks, the actual impact for now is focused on branded, patent-protected medicines — most Indian exports are generics, which remain exempt. Still, the uncertainty around future policy shifts keeps nerves on edge,” Ajit Mishra, SVP-Research at Religare Broking, told PTI.
Sun Pharma, which markets patented drugs including Ilumya, a psoriasis treatment approved by the US FDA, faces limited impact, according to one analyst.
“The impact on Sun is not very meaningful,” Vishal Manchanda, equity analyst at Systematix Group told Reuters. “It may be between 1% to 3% of EBITDA.”
He noted the company also has a contract manufacturing unit through EU partners for specialty drugs, where a 15% tariff applies to EU exports to the US.
Generic drugs are copies of branded medications produced after original patents expire, typically sold at significantly lower prices and comprising the bulk of India’s pharmaceutical exports – a trend that has earned India the informal title of “pharmacy of the world”.
India is currently the third-largest producer of drugs by volume globally and accounts for 20% of global generic drug exports
Patented or branded drugs are original formulations under patent protection, often developed by multinational companies and sold at premium prices — these are specifically targeted by Trump’s 100% tariff.
Biosimilars are copies of complex biological drugs and occupy a middle ground, with industry experts expressing concern about their potential inclusion under the tariff regime despite their role in providing affordable access to expensive cancer and autoimmune treatments.
However, broader concerns emerged about contract drug manufacturing organisations (CDMOs). “There is a general worry that CDMO might be impacted as the US moves manufacturing in-house,” Manchanda told Reuters.
India’s pharmaceutical sector has grown rapidly to cross $30 billion in FY2025, with the US accounting for 34.5% of all exports according to the Pharmaceuticals Export Promotion Council of India (PHARMEXCIL).
The tariff announcement follows months of escalating threats aimed at bringing pharmaceutical manufacturing back to the United States. Earlier this year, the Trump administration launched a Section 232 investigation into pharmaceutical imports to determine if they posed a national security threat, giving the president authority to impose tariffs or restrict imports.
In July, Trump had threatened a 200% tariff on pharma imports if companies did not relocate manufacturing to America, making Friday’s announcement a continuation of sustained pressure on the sector.
US experts have highlighted America’s growing dependence on foreign imports, with the Center for a Prosperous America noting that “the bulk of US pharmaceutical imports come from just two countries: China and India. Together, they supply the majority of US generics and essential medicines.”
“Accounting for both finished drugs and essential base Active Pharmaceutical Ingredients (APIs), China and India supply the US with about 70-80% of the US’s total generic drug supply,” the centre wrote.
A 2023 shutdown of an Indian plant by the US Food and Drug Administration for violating safety standards led to cancer drug shortages across America, underlining supply chain vulnerabilities that the administration seeks to address.
