Shares of Indian pharmaceutical firms once again tumbled after a brief relief as US President Donald Trump plans tariffs of around 25% on automobile, semiconductor and pharmaceutical imports.
Trump, however, did not specify whether the measures would target specific countries or apply to all vehicles imported to the US. This comes after he previously announced 25% tariffs on steel and aluminum that are set to take effect in March.
The benchmark for pharmaceutical shares — Nifty Pharma — has plunged over 13% this year from a potential trade war from Trump's tariff threats. The index slipped nearly 6% last week when Trump proposed his reciprocal tariff plans — affecting nearly every country, with India, Japan, and the European Union being hit the most.
Investors' wealth worth over Rs 2-lakh crore in Nifty Pharma was wiped out this year, mainly on account of Trump's tariff threats, according to Bloomberg data.
On pharmaceutical drugs and semiconductor chips, Trump said, “It'll be 25% and higher, and it'll go very substantially higher over a course of a year,” according to a Bloomberg report. Trump said he wanted to give companies “time to come in” before announcing new import taxes.
Analysts, however, remain optimistic on pharma companies, despite concerns over potential US tariffs. The impact of such tariffs would be minimal, given the essential nature of generic drugs in the US healthcare system, according to HSBC.
Indian pharmaceutical companies, which supply 60% of generic drug volumes to the US, are expected to continue playing a crucial role in lowering healthcare costs. HSBC anticipates that the market will remain focused on the long-term growth prospects of the sector.
Nifty Pharma fell as much as 3.19% on Wednesday, led by the decline in Abbott Laboratories Ltd., Lupin Ltd. and Ajanta Pharma Ltd. The index pared losses to trade 1.03% lower as of 10:00 a.m., compared to a 0.20% advance in Nifty 50.
Aurobindo Pharma Ltd. fell over 9.5% during the day as the firm had another fallout. The firm announced the completion of a US FDA pre-approval inspection in its subsidiary with five observations.
Zydus Lifesciences Ltd. fell as much as 6.45% in early trade, while Lupin Ltd. tumbled by 6% on Wednesday. Shares of Dr. Reddy's Laboratories Ltd. and Ajanta Pharma Ltd. were trading with losses of over 2% during the morning session.
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