US Tariff Concerns Trigger Sell-Off in Pharma Stocks; Sun Pharma, Lupin, Dr Reddy’s Decline 2-4%
Shares of Indian pharmaceutical companies came under heavy selling pressure on February 14 amid rising concerns over potential US tariffs on drug imports. The decline followed comments from former US President Donald Trump, who suggested imposing reciprocal tariffs on several imported goods, including automobiles, semiconductors, and pharmaceuticals. This statement has fueled speculation that Indian drugmakers, which rely heavily on exports to the US market, could face new cost pressures if such measures are implemented.
Major pharmaceutical stocks, including Dr Reddy’s Laboratories, Sun Pharma, Lupin, Cipla, Zydus Life, and Aurobindo Pharma, slipped between 1-4 percent during the trading session. These companies generate a significant portion of their revenues from the US market, primarily through the sale of generic drugs. Any tariff imposition on pharmaceutical imports would likely increase costs, reduce profit margins, and impact the pricing competitiveness of Indian firms in one of their most crucial markets.
The broader pharmaceutical sector was also affected, with stocks such as Granules India, Natco Pharma, Laurus Labs, Glenmark, Mankind Pharma, Biocon, and Divi’s Labs witnessing sharper declines in the range of 2-9 percent. As a result, the Nifty Pharma index tanked approximately 3 percent, making it the worst-performing sector of the day. Market participants expressed concerns that even the prospect of such tariffs could lead to increased volatility in pharma stocks, with investors adopting a cautious stance until more clarity emerges.
If the US moves forward with these tariff measures, it could deal a significant blow to the Indian pharmaceutical industry, which has long been a key player in supplying affordable generic drugs to the US market. Higher tariffs could increase the cost of exporting medicines to the US, making it difficult for Indian companies to maintain their price advantage over domestic US drug manufacturers. Given that pricing pressure in the generics market is already intense, additional costs from tariffs could erode margins further, leading to financial strain on Indian pharma companies.
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Source: Moneycontrol
