Tariff Relief Buzz Sends Indian Pharma Stocks Soaring

In a strong market response, India’s pharmaceutical sector saw a sharp rally today following reports that the Trump administration may forgo imposing tariffs on generic drugs. The positive sentiment pushed the Nifty Pharma index up, outpacing broader benchmarks. 

Around mid-morning trade, the Nifty pharma index was up and closed at over 1%, while the broader Nifty50 showed only a modest and closed at 0.54% gain. 

Intraday, the sector gauge climbed as much as 1.5%. 

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Among individual stocks, Aurobindo Pharma share price led the charge with gains near 4.49%, while Lupin rose about over 2%. 

Other notable advances included Zydus Lifesciences and closed at nearly 1% and Dr Reddy’s at aroud 1%. 

Several other major names — including Piramal Pharma stock price, Biocon, Divi’s Labs, Glenmark, Cipla, Sun Pharma and Ajanta — recorded gains in the range of 0.75% to 1.35%. 

What Sparked the Rally

The surge followed a Wall Street Journal report suggesting that the Trump administration is considering excluding generic medicines from the proposed tariffs on pharmaceutical imports. 

This potential exclusion is seen as a scaling back of the broader tariff plan targeting the drug sector. However, observers caution that the decision is not finalised and could change in the coming weeks depending on internal deliberations within the U.S. administration. 

Earlier, the White House had floated a 100% tariff on brand-name drugs beginning October 1, though it had not explicitly included generics. 

The deadline to impose such tariffs was later postponed to allow for negotiations. 

Impact on Indian Pharma Exports

India relies heavily on exports of generic drugs to the U.S. In fiscal year 2024-25, India’s pharmaceutical exports to America amounted to USD 10.52 billion, representing roughly 35% of its total pharmaceutical exports. 

In FY24, those exports were about USD 8.73 billion, accounting for 31% of total exports. Generic and off-patent formulations — including tablets, injectables, antibiotics, vitamins and cardiovascular drugs — form a major share of these exports. 

Because of this, any tariff blocking generics could seriously impact Indian drug makers’ competitiveness in the U.S. market. 
Certain companies are particularly exposed. Aurobindo Pharma earns about 47% of its revenue from the U.S., and Dr Reddy’s about 45%. 

Gland Pharma reported that 54% of its revenues in FY25 came from U.S. operations. 

Major suppliers of generics — such as Sun Pharma, Lupin, Cipla and Zydus Lifesciences — also have strong exposure to U.S. demand. 

Key Takeaways

• Market Reaction: Pharma stocks rallied sharply today as investors embraced the possibility that generics may be spared from U.S. tariffs. 
• Top Movers: Aurobindo and Lupin led gains, supported by strong exposure to U.S. generics markets. 
• Export Vulnerability: A large share of India’s pharma exports heads to the U.S., with generics forming the bulk of those shipments. 
• Uncertain Policy: While the current move hints at tariff relief for generics, it remains tentative and could be reversed in future decisions. 

Conclusion

The possibility that the U.S. might exclude generic drugs from upcoming import tariffs has injected optimism into India’s pharmaceutical sector. Investors responded with sharp gains across pharma stocks, lifting the Nifty Pharma index well above the broader market. The gain is especially meaningful given India’s dependence on exporting generics to the U.S. However, the final decision from Washington remains unsettled, and the sector’s future direction will depend heavily on how U.S. trade policy ultimately evolves.