Indian Pharma Stocks Slide as U.S. Slaps 100% Tariff on Imported Drugs

Indian pharmaceutical stocks witnessed a sharp decline on Friday, September 26, after the United States announced steep tariffs on imported drugs. The Nifty Pharma index dropped 2% over the past month, with leading companies such as Cipla, Divi’s Laboratories, and Ajanta Pharma falling between 5% and 6%.

U.S. Tariffs Trigger Market Sell-Off

The immediate trigger came from U.S. President Donald Trump’s declaration of a 100% tariff on branded and patented medicines imported into the country starting October 1. The announcement sent shockwaves across the Indian pharmaceutical market, where companies like Sun Pharma share price (-2.05%), Aurobindo Pharma, Lupin, Gland Pharma, and Cipla registered losses of up to 1-2% during early trade.

Impact on Indian Pharma Majors

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Among the worst hit were Natco Pharma, Wockhardt, Caplin Point, Alembic Pharma, and Laurus Labs, which featured prominently on the list of top losers on the Nifty 500 index. Eight out of the top ten stocks in decline came from the pharma sector alone, underlining the immediate impact of the U.S. move.

However, the new measure will not apply to firms that already operate or are setting up drug manufacturing facilities within the U.S. This exemption is seen as an attempt to encourage foreign pharmaceutical companies to build local capacity.

Section 232 Probe and Future Risks

The tariff announcement was not entirely unexpected. In August, President Trump had cautioned that levies on imported drugs could climb as high as 250%, with a gradual increase planned—from an initial small tariff to 150%, and eventually 250%. Friday’s decision marks the beginning of that escalation.

The pharmaceutical industry has been under scrutiny by the U.S. Commerce Department under Section 232, which investigates potential risks to national security from imports. The latest probe has expanded to cover not just medicines, but also medical supplies such as surgical masks, N95 respirators, gloves, syringes, and needles.

Interestingly, prescription medicines, biologics, and over-the-counter drugs are not part of this specific tariff probe. The Commerce Department clarified that these products are being examined separately under another Section 232 investigation.

Market reactions were swift. Shares of Caplin Point and Wockhardt slipped by 4.5% each, while Natco Pharma, Laurus Labs, Alembic Pharma, and Sun Pharma were down between 3% and 4%. Analysts believe that the heavy reliance of Indian pharma companies on the U.S. market makes them particularly vulnerable to tariff-related shocks.

Conclusion

The dramatic decline in Indian pharmaceutical stocks demonstrates how vulnerable the industry is to U.S. trade policy. Businesses with current or planned American manufacturing facilities might not be immediately impacted, but if tariff rates continue to rise, the entire industry might be at risk. It is anticipated that investors would continue to exercise caution until Washington sends out more precise policy signals.