Pharma Stocks Slide as Trump Imposes 100% Tariff on Branded Drug Imports

September 26, 2025 By: Skumar0 comments

Global pharma markets were shaken on Friday, September 26, as U.S. President Donald Trump announced a 100% tariff on branded and patented drug imports starting October 1, 2025. The move has triggered a sharp sell-off in Indian pharma stocks, while creating opportunities for domestic generic manufacturers.

Trump’s Announcement

In a post on Truth Social, President Trump said:

“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.”

He clarified that companies constructing U.S.-based manufacturing facilities will be exempt from the tariff. The policy aims to encourage onshore production of critical medicines and reduce dependence on imports.

Market Impact

The reaction was immediate. At 9:22 a.m., the Nifty Pharma Index was down by 2.3%, with all major constituents trading in the red.

• Natco Pharma, Gland Pharma, and Sun Pharma fell up to 4% in early trade.
• Sentiment was broadly negative for branded drug exporters with U.S. exposure.

However, generic formulations were exempt from the new tariffs, a key relief for Indian pharma companies that dominate the U.S. generics market.

Why Generics Hold the Edge

India supplies:

• ~45% of U.S. generic drug demand
• 10–15% of biosimilars by volume

Generic exports have long been a growth driver for Indian companies like Dr Reddy’s, Lupin, Aurobindo, and Sun Pharma. Since generics are excluded from the tariff, these firms may see stable or even stronger demand from U.S. buyers looking for affordable medicines.

Experts warn that if tariffs were ever applied on generics, it could cause drug shortages and soaring healthcare costs in the U.S., making such a move unsustainable.

Sectoral Winners and Losers

• Potential Beneficiaries: Generic-heavy players such as Dr Reddy’s, Lupin, and Aurobindo stand to gain as their low-cost formulations remain tariff-free.
• At Risk: Branded drug exporters like Sun Pharma and Biocon face challenges. However, Biocon recently commissioned a new U.S. plant, shielding it from immediate tariff impact.

Policy Perspective

The White House defended the move as a “common sense policy” to strengthen America’s pharmaceutical supply chain. White House Press Secretary Karoline Leavitt said:

“Do we want our life-saving drugs and medicine to be made in China or here in the United States of America? This is about securing critical supply chains.”

Trump has previously suggested tariffs could rise as high as 200% in the future, giving global pharma companies a year to set up U.S. facilities or face penalties.

Outlook for Indian Pharma

• Short-term: Pressure on branded exporters and volatility in pharma indices.
• Medium-term: Generics players may benefit from sustained U.S. demand.
• Long-term: Companies may consider setting up U.S. plants to bypass tariff risks.

For investors, the sector is likely to see divergence: while branded players could face headwinds, generics-focused firms are positioned to benefit from the exemptions.

Key Takeaways

• Trump’s 100% tariff on branded drug imports rattled pharma stocks.
• Generic formulations are exempt, giving Indian exporters a cushion.
• Nifty Pharma fell 2.3%, with stocks like Natco, Gland, and Sun Pharma down up to 4%.
• India supplies 45% of U.S. generics, ensuring its continued importance in the global pharma supply chain.
• Biocon’s new U.S. facility shields it, while branded exporters may face pressure.

💡 Rupee Fincare Insight:
The current volatility highlights the importance of sector diversification in portfolios. Investors with pharma exposure should closely track U.S. trade policies, as regulatory moves can significantly impact valuations.

👉 Stay updated with global market trends at rupeefincare.com.