Indian pharmaceutical stocks crashed after U.S. President Donald Trump announced a 100% tariff on branded and patented drugs. The new levy, effective October 1, sent jitters through the market, pulling down the entire sector.
Market Reaction to Tariff Announcement
By 9:30 a.m. IST, all 20 constituents of the Indian pharma index were trading lower. Sun Pharmaceutical Industries, a sector heavyweight, dropped 3.4%, dragging the index down 2.6%. The sell-off reflected investor concerns over potential long-term consequences of the tariff move.
The United States accounts for slightly more than one-third of India’s drug exports, valued largely in the form of affordable generics. In fiscal 2025, Indian generic exports to the U.S. rose by 20% to reach about $10.5 billion.
Limited Short-Term Impact but Rising Concerns
Market analysts noted that the immediate effect of the tariff could be muted since India primarily exports generics rather than branded drugs. ICICI Securities analyst Pankaj Pandey highlighted this in a research note, stating:
“The near-term impact of the tariffs is likely to be limited, as India mainly exports generics. That being said, uncertainty still remains whether complex generics and biosimilars will come under tariff embargo in the future.”
Broader Trade War Context
Trump justified the latest measures as necessary to protect U.S. manufacturing and safeguard national security. The move follows a series of sweeping tariffs imposed on America’s trade partners, with duties on some imports climbing as high as 50%. Products such as steel, trucks, and furniture have also faced targeted levies.
The new duties add to global economic uncertainty, disrupting business decision-making and raising concerns about growth. The U.S. Federal Reserve has already cautioned that higher tariffs are contributing to rising consumer prices.
Uncertainty Ahead for Indian Pharma
Trump’s Truth Social post announcing the tariff did not clarify whether the levies would stack on top of existing duties. Recent trade agreements with the EU, Japan, and the UK include caps on tariffs for certain pharmaceutical products, which could provide some relief.
Still, concerns remain over whether future U.S. policies might extend to complex generics and biosimilars, sectors where India has been seeking growth. For now, Indian pharma firms and investors are bracing for potential turbulence as the new tariffs take effect on October 1.
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