Indian pharma shares saw a steep decline after comments by former U.S. President Donald Trump, who indicated the potential for the imposition of fresh tariffs on foreign drugs if he comes back into power. The remarks, interpreted as a threat to international drug suppliers, have caused a stir in investor sentiment, with leading Indian pharma players seeing their shares take a severe beating on the stock exchange.
Trump’s comment, during a recent campaign speech, highlighted his commitment to prioritizing domestic drug production and decreasing dependence on foreign pharma imports—particularly from India and China. The action, he implied, would decrease the cost of drugs in the U.S. while increasing local industry.
Acting quickly to the news, stocks of leading Indian pharma majors such as Sun Pharma, Dr. Reddy’s Laboratories, Cipla, and Lupin fell between 3% and 7% in initial trading hours. Market experts said the fall was due to concerns about possible disruption of exports to the U.S., which is among the largest markets for Indian drug makers.
India is one of the biggest providers of generic drugs to the United States, and the U.S. generates a considerable amount of revenue for most Indian pharmaceutical companies. Any tariff imposition or policy change in drug import rules would have a ripple effect on profitability and growth opportunities in the industry as a whole.
Industry observers, while noting the concern, counselled restraint and pointed out that even if these policy shifts—should they take place—happened, they would continue to need legislation and could well not be sudden. Yet mere uncertainty was enough to elicit a knee-jerk response from the markets.
While global economic policies continue to be in flux in the lead-up to the U.S. presidential elections, Indian pharma stakeholders are anxiously observing unfolding events, set to steer diplomatic and regulatory headwinds over the coming months.
