Pharma stocks exhibited remarkable resilience in the morning trade on Wednesday, July 9, despite US President Donald Trump’s threat of a very high tariff of up to 200 per cent.
Several pharma stocks, including Laurus Labs, Lupin, Biocon, Cipla and Divi’s Labs, rose up to 3 per cent in the morning session, pushing their sectoral index, Nifty Pharma, higher by about half a per cent in a weak market.
The Nifty Pharma index was up 0.30 per cent at 22,231, around 9:50 AM, with 14 out of the total 20 stocks in the green. Equity benchmark Nifty 50 was 0.13 per cent down at 25,489 at that time.
Trump reiterates pharma tariffs
As Mint reported earlier, Trump has warned that pharmaceuticals could face an even steeper tariff, though he suggested the move would not be immediate.
“They’re going to be tariffed at a very, very high rate, like 200 per cent,” Trump said, adding that the measure would be announced soon and take effect after at least a year.
Steeper tariffs on pharmaceutical imports to the US could be significantly negative for Indian pharmaceutical firms, as the US is India’s largest overseas market for pharmaceuticals.
According to government data, India’s pharmaceutical exports in FY25 rose by 9.40 per cent year-on-year to $30.46 billion. Among the top five export destinations, the US ranked first with a 34.51 per cent share. The UK came in second, accounting for 3 per cent of the total exports.
Experts believe a 200 per cent tariff on pharma imports could hit the demand for Indian pharma products due to a price increase. Notably, India is among the key suppliers of generic medicines to the US.
Pharma companies’ margins may improve in Q1FY26
Some experts expect the Q1 results of pharma companies to be better than the previous few quarters, primarily due to new launches and lower input costs.
“We anticipate a 30bps improvement in margins on a year-on-year basis for most companies in our coverage. The primary reasons for this margin improvement are (i) new launches during the year’s formulations business, (ii) stable freight costs and decline in API prices, and (iii) lower input costs and a better product mix towards niche launches,” said Axis Securities.
Axis Securities expects pharmaceutical companies within its coverage to collectively show revenue growth of 9.9 per cent year-on-year and 0.8 per cent quarter-on-quarter, along with EBITDA growth of 11.3 per cent year-on-year and 3.6 per cent quarter-on-quarter.
Axis said adjusted PAT may grow by 13.3 per cent year over year and decrease by 3.5 per cent quarter over quarter. Domestic formulations and niche launches in the US market will likely drive this growth.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
