Pharma stocks slide as Trump's 100% generic drug tariff plan spooks investors

Indian pharma stocks tumbled Thursday after President Donald Trump proposed a 100% tariff on imported generic drugs, a move that would directly hit the country's largest export sector to the U.S.

The Nifty Pharma index fell 3.2% in early trade, its steepest single-day drop in six months. Sun Pharmaceutical Industries led the decline, down 4.1%, while Dr. Reddy's Laboratories lost 3.8% and Cipla dropped 3.5%. The selloff extended across the sector, with Lupin and Aurobindo Pharma each falling more than 3%.

Trump's plan, outlined in a White House trade policy memorandum, would impose a 100% tariff on pharmaceutical imports from countries the administration deems non-cooperative on trade. India supplies roughly 40% of the generic drugs consumed in the U.S., making it the most exposed country under the proposal, trade analysts said.

The tariff threat comes as Indian pharma companies already face pricing pressure in the U.S. market and rising regulatory costs. A 100% levy would effectively double the cost of Indian generics for U.S. buyers, forcing distributors to either absorb the cost or pass it to consumers, sector analysts said.

Shares of contract research and manufacturing firms also fell. Divi's Laboratories dropped 2.9%, and Laurus Labs lost 2.5%.

The broader market was lower, with the Sensex down 0.4% and the Nifty 50 falling 0.5%. The rupee weakened 0.2% against the dollar on concerns about the trade impact.

No timeline for implementing the tariff was announced. The administration said the policy would be phased in after a 90-day comment period.

Among the stocks tracked by AlphaScala, HDB stock page (Alpha Score 38) and INFY stock page (Alpha Score 57) were down 0.6% and 0.3% respectively, while WIT stock page (Alpha Score 46) fell 0.8%.