Sun Pharma, Lupin, Biocon, other pharma stocks fall over 3% after Donald Trump announces 100% tariffs on patented drugs

Indian pharmaceutical stocks fell sharply on Friday after US President Donald Trump announced a 100% tariff on branded and patented drugs starting October 1, unless companies are building manufacturing plants in the United States. The move sent shockwaves through the sector, raising concerns over export revenues and market access.

Shares of Sun Pharmaceutical Industries, Lupin, Biocon, Natco Pharma, Laurus Labs, Gland Pharma, and IPCA Laboratories declined over 3% each, while Zydus Lifesciences, Divi’s Laboratories, Ajanta Pharma, Granules India, Alkem Laboratories, and Mankind Pharma dropped more than 2%, dragging the Nifty Pharma index down by 2.6%.

Trump posted on his Truth Social that there would be no levies on pharmaceutical imports if companies have broken ground on a US manufacturing plant, or if such a plant is under construction.

“Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. ‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction.’ There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started,” Trump wrote.

Impact on Indian pharma companies

Analysts believe the 100% US tariff on branded and patented pharmaceutical products could negatively impact Indian pharmaceutical exporters, as the US represents the largest market for Indian pharma, accounting for approximately 35% of exports, valued at $10 billion in FY25, according to the Pharmaceuticals Export Promotion Council of India.

“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 US exports. However, firms with manufacturing plants under construction in the US will be exempt, offering an opportunity to mitigate tariff exposure,” said Maitri Sheth, Pharma & Healthcare Analyst at Choice Institutional Equities.

However, Generics, OTC drugs, biologics and specialty drugs are currently excluded from the tariffs, as they fall under a separate Section 232 investigation by the US Commerce Department.

India is the largest supplier of generics to the US. In 1H 2025 alone, exports stood at $3.7 billion.

“Direct near-term impact on Indian pharma is limited, as the tariffs target branded/patented drugs largely dominated by global innovators. Uncertainty remains around whether complex/specialty generics (an area of increasing focus for Indian players) may come under scrutiny in future. The US remains the largest market for Indian pharma; hence, any expansion of tariff scope could materially alter the growth/export trajectory,” said analysts at Ashika Institutional Research.

At present, they believe headline risk is high but operational risk is low for Indian exporters.

“We should watch for any policy spillover into specialty/complex generics, which could be the next flashpoint. That said, several aspects of the announcement remain ambiguous and further clarity from regulators can be expected in the coming weeks,” said the analysts.

Rohit Bhat, Research Analyst at B&K Securities noted that Trump’s 100% tariffs on branded or patented product would or may affect Indian players like Sun Pharmaceutical Industries, Zydus Lifesciences and Glenmark (Specialty Innovative brands).

“Sun Pharma has the largest exposure at $1.2 billion, largely coming from the US market. CDMO players like Divi’s Laboratories, Cohance Lifesciences, Laurus Labs, Neuland Laboratories, who cater to Innovators for APIs and intermediates (nearly 35-40% exposure each to US & Europe). Biosimilars are also branded, to impact Biocon (made largely in India), future players with US pipeline include Dr Reddy’s Laboratories, Aurobindo Pharma and Lupin,” Bhat said in a note.

Sun Pharma’s biggest branded patented product Ilumya (revenue of $650 million) is made in Korea through Samsung, and other brands like Winlevi are made in the US, he added.

“Hence, key players who could get impacted due to Trump’s 100% tariff plan are Sun Pharma and Biocon. CDMO players who make API or intermediates for their clients would be less impacted as their clients would already have their own or third party CMO manufacturing units in the US. There will be no impact on Indian Generics players as they seem to be exempted for now as they are off-patented / non-branded drugs,” Bhat said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.