Pharma Stocks Crash: Gland, Aurobindo, Biocon, Sun Pharma slump up to 6% as Trump eyes import tariffs

Indian pharma shares faced huge selling pressure on April 9 following the indication of a possible tariff on pharma imports by US President Donald Trump, as part of his overall "reciprocal" trade policy. The announcement led to an industry-wide selloff, pulling the Nifty Pharma index 2.64 per cent lower, lagging the overall market.

Gland Pharma, Aurobindo, Biocon lead the decline

Gland Pharma topped the losses with a drop of almost 6 per cent, followed by Aurobindo Pharma, which fell by almost 5 per cent. Biocon's shares fell more than 4 per cent, and Sun Pharma, Lupin, Laurus Labs, Dr Reddy's Laboratories, and Zydus Lifesciences also lost between 2-3 per cent.

The steep correction indicates increased investor worries about the industry's high exposure to the US market, which is a major revenue earner for Indian pharma majors.
In a speech at a Republican fundraiser, Trump stated that the planned tariff would encourage pharmaceutical companies to relocate to the US, in line with his wider "America First" economic agenda. The action is part of a comprehensive tariff regime that also includes a 104 per cent duty on Chinese products, and a minimum 10 per cent tax on most imports from countries with trade surpluses with the US.

Experts opine that these protectionist steps may have a significant bearing on Indian drug exporters, particularly those with high US exposure.

Indian pharma's US exposure rings alarm bells

As per Geojit Financial Services, many of the top Indian pharma players earn a significant percentage of revenue from the US:

Zydus Lifesciences: 47%

Aurobindo Pharma: 46%

Dr Reddy's: 41%

Lupin: 38%

Sun Pharma: 32%

Cipla: 30%

Any disruption caused by tariffs would harm their top line and affect future guidance on margins, particularly as the industry struggles against increasing regulatory challenges and pricing constraints in the US generics space.

Outlook: Turbulence ahead for pharma pack

With no finality yet on the size and composition of Trump's planned pharma tariffs, observers anticipate ongoing volatility in Indian pharma stocks, particularly high US revenue-dependent ones. For now, the space may lag broader indices amid outside overhangs.