The Nifty Pharma index slipped sharply by over 2% in the intra-day trading session, extending the benchmark’s losing streak to five consecutive sessions. A quick look at the list of pharma sector stocks indicate that all the 20 constituents are trading in red today.
This decline in share price of Pharma stocks comes in response to US President Donald Trump’s announcement of a 100% tariff on branded pharmaceutical imports, a move that raised investor concerns across Dalal Street.
However, from the Indian perspective, most analysts indicate that the long-term impact for Indian companies could be limited and need to be analysed further as the tariffs are primarily on branded drugs. A significant portion of the Indian exports to US are generics. Indian exports cater to nearly 40% of the US generics market. Most market observers see the current weakness as a knee-jerk reaction and they are looking into the detailed implications.
Nifty Pharma Index down: Trump’s 100% tariff announcement rattles markets
The sharp fall in pharmaceutical stocks came after Trump said he would impose a full 100% tariff on branded and patented drugs entering the US starting October 1.
The announcement raised concerns over the revenue prospects of Indian pharma companies that rely heavily on the US market. The measure, however, exempts companies already setting up or operating manufacturing plants in the US.
In August, Trump had hinted that tariffs on pharma imports could eventually rise to 250%, beginning with smaller increments. The latest development is part of an ongoing Section 232 investigation by the US Commerce Department, which is also reviewing tariffs on medical devices such as N95 masks, gloves, syringes, and needles.
Nifty Pharma Index slips over 2% intraday
The Nifty Pharma index opened at 21,623.95, fell to a day’s low of 21,390.25, down 587 points or 2.69%. At the time of writing, the Nifty Pharma Index was down around 1.79%.
Nifty Pharma Index down: Stocks trading in the red
Some of the key losers in the pharma space include the likes of Natco Pharma, Laurus Labs, Alembic Pharma, Sun Pharma, Gland Pharma, Ajanta Pharma, and Glenmark Pharmaceuticals slipped between 2-4% in the early trading hours. Divi’s Labs, Mankind Pharma, Abbott India, Granules India, and Lupin declined over 1% each.
Furthermore, share price of Caplin Point and Wockhardt fell around 4.5%.
Nifty Pharma Index down: Heavy reliance on the US market
One of the reasons behind the sell-off is the US market’s significance for Indian pharma companies.
The US accounts for a substantial share of Indian pharmaceutical exports. This is particularly in generics which makes tariff announcements a potential threat to revenues and profit margins.