Indian pharmaceutical stocks took a hit on February 19, 2025, as the Nifty Pharma Index dropped 3.2% following Donald Trump’s announcement of a potential 25% tariff on pharmaceutical imports.
Aurobindo Pharma led the decline, tumbling 9.5% intraday, while major players like Lupin, Dr Reddy’s, and Sun Pharma also saw significant losses. With 38% of India’s drug exports going to the US, this announcement has sent shockwaves through the Indian pharma sector.
Let’s break down what this means for Indian pharma companies and the broader market.
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Trump’s 25% tariff threat
On February 19, 2025, US President Donald Trump announced his plan to impose 25% tariffs on pharmaceutical, automobile, and semiconductor imports. The move is part of his larger agenda to boost domestic manufacturing and reduce dependence on imports. While he did not specify an implementation date, he stated that tariffs would start at 25% and increase over time, giving companies time to shift production to the US.
This protectionist stance rattled global markets, and the Nifty Pharma Index saw a sharp 3.2% decline, hitting an intraday low of 20,299.95.
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Pharma stocks that took the biggest hit
| Stock | Intraday Loss (%) | Closing Price (Rs) |
| Aurobindo Pharma | 9.5% | 1,052.70 |
| Lupin | 5.99% | 1,892.75 |
| Zydus Life | 6.44% | N/A |
| Dr Reddy’s Labs | 5.83% | 1,128.90 |
| Cipla | 3.76% | N/A |
| Sun Pharma | 3.03% | 1,647.35 |
Other major pharma stocks like Glenmark (-2.55%), Biocon (-2.54%), and Torrent Pharma (-1.85%) also declined.
Why does this matter?
38% of India’s pharma exports head to the US
The US is the largest importer of Indian pharmaceuticals, accounting for $8.73 billion in fiscal 2024, a 16% increase from the previous year. Indian companies supply nearly 40% of the generic drugs used in the US, making them highly vulnerable to tariff hikes.
Trump’s move could significantly impact profit margins, as increased tariffs would either force Indian companies to absorb higher costs or pass them on to US consumers, potentially making Indian drugs less competitive in the world’s largest pharma market.
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India’s response and market outlook
In response to Trump’s announcement, the Indian government has scheduled a bilateral meeting with the US administration in Washington, D.C. to discuss trade implications. While the specifics are yet to be revealed, analysts believe that unless exemptions or reductions are negotiated, the Indian pharma sector could face prolonged volatility.
Market expert take: Is this an overreaction?
Some analysts believe that the market overreacted to the news, with technical charts suggesting potential recovery. According to Jigar S Patel, Senior Manager at Anand Rathi:
“If the Pharma Index closes above 21,150, it could signal a trend reversal, attracting fresh buying interest. Investors should watch this level for confirmation.”
While near-term pressure remains, long-term demand for generics and cost-effective medicines in the US could cushion the impact for Indian pharma firms.
Final thoughts
The Nifty Pharma Index’s 3% drop is a direct reaction to Trump’s tariff threat, but the actual implementation timeline remains uncertain. If tariffs are imposed, Indian pharma companies may explore strategies like:
- Setting up manufacturing in the US to bypass tariffs
- Shifting focus to alternative export markets beyond the US
- Passing additional costs to US buyers, though this risks losing market share
For now, investors should monitor key developments, especially the bilateral trade talks between India and the US. The long-term fundamentals of Indian pharma remain strong, but short-term volatility is inevitable.
