Shares of Indian drugmakers plunged during early trade on Thursday after The Financial Times reported the Trump administration is preparing to impose tariffs of 100% on certain medicines to reshore manufacturing. The Nifty Pharma index fell as much as 3.8% compared to a 2.1% drop in the benchmark Nifty 50.
The levies, which could be announced as early as Thursday, would apply to companies that have not reached agreements with the White House, the FT reported, citing people familiar with the matter.
The proposed tariffs follow through on threats made by Donald Trump last year, when he warned that imports of branded or patented drugs could face tariffs of up to 100% unless manufacturers set up local production facilities. According to the report, the new levies being unveiled this week stem from a national security investigation conducted under Section 232 of the Trade Expansion Act of 1962, which was initiated in April last year.
The report also noted that tariffs imposed under such Section 232 investigations were not affected by the Supreme Court's February ruling that struck down the 'Liberation Day' tariffs Trump imposed using emergency powers last April.
Biocon Ltd. was the top loser in the Nifty Pharma index, tanking over 5%. Glenmark Pharma Ltd., Aurobindo Pharma Ltd., Sun Pharma Ltd., and Ipca Labs Ltd. fell over 4%.
The US is the world's largest market for pharmaceutical products where Indian companies sell generic drugs. Sales in the US is a major contributor to their consolidated revenue.
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