Pharma stocks traded lower on Friday, 24 July, after US President Donald Trump unveiled a phased tariff plan on imported generic medicines, raising concerns over the outlook for Indian drug exporters.
Abbott India shares were the biggest laggards, falling 3.69% on the BSE. Akums Drugs & Pharmaceuticals shares also witnessed notable selling pressure, slipping 2.06%, while Acutaas Chemicals shares declined 1.99%, and Aarti Drugs shares fell 1.76%. Shares of Alembic dropped 1.61%, Ajanta Pharma lost 1.43%, and Artemis Medicare Services declined 1.32%, reflecting weakness across the broader pharma pack.
Under the proposed policy, generic drugs imported into the US will continue to attract zero tariffs for two years from 1 August. Beginning August 2028, imports will face a 100% tariff for one year, which will increase to 200% from August 2029.
In a post on Truth Social, Trump said the move is aimed at encouraging pharmaceutical companies to shift manufacturing to the United States. Companies that fail to relocate production during the transition period could face the higher tariffs. The proposal applies only to generic medicines, while patented, branded and innovative drugs will continue under the existing tariff framework.
The US is the largest overseas market for Indian pharmaceutical companies, with IQVIA data showing that Indian drugmakers account for nearly 47% of the US generic medicines market.
Param Desai, Research Analyst at PL Capital, said the announcement was largely unexpected and that significant uncertainty remains around how the tariff policy will eventually be implemented. He noted that although generic drug imports will continue to enjoy zero tariffs until August 2028, the proposed sharp increase thereafter could weigh on sentiment.
Desai said several Indian pharmaceutical companies already have manufacturing facilities in the US, which may partly cushion the impact. However, he added that a two-year transition period is unlikely to be sufficient for companies to relocate their entire generic drug manufacturing value chain.
He also pointed out that the proposed tariffs would take effect near the end of Trump’s current presidential term, making their long-term implementation uncertain. In the near term, Desai expects a negative reaction in pharma stocks, particularly among large-cap generic drug manufacturers, until greater policy clarity emerges.
Nifty Pharma today
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty Pharma Index has corrected by around 2% from its recent high of 26,136, recorded on 16 July, following the announcement of proposed US tariffs on imported generic medicines, effective from August 2028. He noted that the index appears to have largely priced in the news.
Shah said the index witnessed buying interest at lower levels, although the rebound lacked strong momentum. Technically, the index is trading marginally below an upward-sloping trendline connecting the swing lows of 21,150 (2 April) and 24,035 (17 June), and has also slipped slightly below its 20-day exponential moving average (EMA). He added that the Relative Strength Index (RSI) has fallen below the 60 mark, indicating a temporary loss of momentum.
However, Shah believes it is premature to conclude that the current correction marks the beginning of a broader trend reversal. According to him, the 25,300-25,250 zone is the immediate support for the Nifty Pharma Index, and as long as it holds above this level, the broader bullish structure is likely to remain intact. On the upside, he identified the 25,700-25,750 zone as the immediate resistance, adding that a decisive breakout above this range could signal a resumption of the prevailing uptrend.
