Pharma stocks are in a free fall on Friday, September 26, after the US President Donald Trump declared new tariffs. From October 1, 2025, 100% tariff will be applied on certain pharmaceutical products. Pharma companies with significant exposure to US market is expected to face the brunt of the 100% tariffs.
Pharma Stock Crashed:
At the time of writing, Laurus Labs was the top loser of Nifty Pharma index, falling by over 7%. Meanwhile, companies like Natco Pharma and Biocon followed with decline of 4.61% and 4.09% respectively. Zydus Life also plunged by 3.3%.
Furthermore, Sun Pharma, Divis Lab, Glenmark, Gland, Granules, Lupin and Ajanta Pharma tumbled by 2% to 3%.
Stocks like Dr Reddy's Lab, Aurobindo Pharma, Cipla, and Alkem Laboratories slipped by 1% to 1.5%. Additionally, JB Chemicals and Abbot India traded in red as well.
However, stocks like IPCA Lab emerged as the top gainer with 1% upside, followed by Torrent Pharma which gained marginally.
That being said, Nifty Pharma index nosedived by 448.95 points or 2.04%, emerging among top draggers of Indian stock market. The index has touched an intraday low of 21,390.25.
Why Pharma Stocks Crashed
"Investor attention will squarely be on the domestic pharma sector after the Trump Administration announced a 100% tariff on imports of branded or patented pharmaceutical products effective Oct 1. This move poses a direct risk to over $3.6 billion worth of annual Indian pharma exports to the US, raising concerns for companies with significant US exposure," said Ponmudi R, CEO of Enrich Money.
Also, Maitri Sheth, Deepika Murarka, Stuti Bagadia, analysts at Choice Institutional Equities in a note said, the 100% U.S. tariff on branded and patented pharmaceutical products could negatively impact Indian pharmaceutical exporters, as the U.S. represents the largest market for Indian pharma, accounting for approximately 35% of exports, valued at USD 10 billion in FY25, according to the Pharmaceuticals Export Promotion Council of India.
They added, "While the tariff primarily targets branded drugs, there is ambiguity over whether complex generics and specialty medicines might also be affected, which could pose challenges for companies relying on U.S. exports. However, firms with manufacturing plants under construction in the U.S. will be exempt, offering an opportunity to mitigate tariff exposure."
100% Tariffs On Pharma Products:
Trump has imposed a 100% tariff on any branded or patented Pharmaceutical Product. This will come into effect from October 1st, 2025.
However, Trump gave the option to escape the 100% tariff as well. He said, "unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America." He emphasized that 'Is Building' be mean as 'breaking ground' and or 'under construction'.
Hence, he said, there will be no tariffs on those pharmaceuticals if they have started construction work of their facility in America.
The announcement was made in the early hours of September 26 through his Truth Social account.
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