New Delhi: Indian pharmaceutical stocks fell sharply on Friday following U.S. President Donald Trump’s announcement of a 100% tariff on branded and patented drugs from October 1, 2025, unless companies are building manufacturing plants in the United States. The move rattled investors, raising concerns over export revenues and market access for Indian pharma companies.
Stock market impact
Shares of Sun Pharmaceutical Industries, Lupin, Biocon, Natco Pharma, Laurus Labs, Gland Pharma, and IPCA Laboratories dropped over 3% each. Zydus Lifesciences, Divi’s Laboratories, Ajanta Pharma, Granules India, Alkem Laboratories, and Mankind Pharma fell more than 2%, dragging the Nifty Pharma index down by 2.6%.
Trump clarified on Truth Social that companies would be exempt from tariffs if construction of a U.S. manufacturing plant had begun. “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,’” he wrote.
Concerns for Indian pharma exporters
The U.S. is India’s largest pharma market, accounting for approximately 35% of exports, valued at $10 billion in FY25, according to the Pharmaceuticals Export Promotion Council of India. Analysts highlighted that while the tariffs target branded drugs, ambiguity remains over whether complex generics and specialty medicines could also be affected.
Maitri Sheth, Pharma & Healthcare Analyst at Choice Institutional Equities, said, “Firms with manufacturing plants under construction in the U.S. will be exempt, offering an opportunity to mitigate tariff exposure. However, companies relying heavily on U.S. exports could face challenges if scope is broadened.”
Currently, generics, over-the-counter drugs, biologics, and specialty drugs are excluded from the tariffs, as they fall under a separate Section 232 investigation by the U.S. Commerce Department. India remains the largest supplier of generics to the U.S., with exports reaching $3.7 billion in the first half of 2025.
Sectoral analysis
Analysts at Ashika Institutional Research noted that the direct near-term impact on Indian pharma is limited, as the tariffs primarily target branded and patented drugs dominated by global innovators. However, any future expansion of tariff coverage to complex and specialty generics could materially affect growth and exports.
Rohit Bhat, Research Analyst at B&K Securities, said, “Key players potentially impacted include Sun Pharma and Biocon. Sun Pharma has $1.2 billion exposure in the U.S., largely from branded drugs like Ilumya (manufactured in Korea) and Winlevi (manufactured in the U.S.). CDMO players such as Divi’s Laboratories and Laurus Labs would be less affected as their clients already operate U.S.-based manufacturing.”
He added that generics manufacturers are largely exempt since their products are off-patent or non-branded.
Conclusion
While headline risks are high, analysts believe operational risk remains low for Indian exporters. Companies are closely monitoring regulatory updates, and any policy spillover into specialty or complex generics could determine the sector’s trajectory in the coming months.