Pharma calls in sick after Trump’s 100% tariff threat
Analysts said, however, that the impact could be limited to a few companies if the tariffs are announced since most Indian pharma companies are generic drugmakers.
The Nifty Pharma Index slipped 4% during intraday trading though it eventually recouped most of the losses to close 0.9% lower tracking a rebound in the benchmark Nifty. The Nifty slipped up to 2.2% but recovered to close 0.2% higher.
“Investors are looking to sell pockets where there is even a hint of bad news due to weak sentiment, and fears of 100% tariffs on pharmaceutical companies led to the sharp fall in pharma stocks,” said Aditya Khemka, chief investment officer at InCred Asset Management.
He pointed out that historically, whenever Trump has spoken about levying tariffs on pharmaceutical products, it was mostly related to innovative products and not the generic or unbranded space.
The tariffs are expected to pertain to companies that haven’t yet struck a deal with the Trump administration for guaranteeing affordable drug prices in the US, according to a Bloomberg report. There could be exemptions and changes for some medicines and disease categories as the plans are still to be finalised, it said.
“The 100% tariff on imported branded pharma is not applicable to Indian pharmaceutical companies as majority of the players deal in generic drugs,” said Vikas Gupta, CEO & chief investment strategist, OmniScience Capital. “Fears that it could also pertain to all kinds of products led to the decline.”The US government is expected to make the announcement as early as Thursday itself, but it remains unclear whether it would materialise.
Out of 20 stocks on the Nifty Pharma Index, 15 declined and five advanced.
Companies which haven’t yet signed a deal with the US to lower the cost of prescription drugs like Sun Pharma stand to be impacted if the tariffs are announced, said analysts.
“Sun Pharma’s portfolio of patented drugs is exposed to tariff threat as it contributes about 15% to the revenue,” said Vishal Manchanda, senior VP, institutional research, Systematix Group.
