Indian pharmaceutical stocks are likely to remain in focus after US President Donald Trump outlined a phased tariff plan for imported generic medicines, giving drugmakers a two-year window before duties begin, while encouraging companies to shift manufacturing to the US.
Under the proposed framework, generic drugs imported into the US will continue to attract zero tariffs for the next two years. However, tariffs could rise to 100% in the third year and eventually 200% thereafter, with the administration aiming to incentivise pharmaceutical manufacturers to establish production facilities in the US.
The announcement has created a mixed outlook for Indian drugmakers, many of which derive a significant portion of their revenue from the US generics market.
Companies with higher US revenue exposure, including Gland Pharma (53%), Aurobindo Pharma (49%), Lupin (42%), Zydus Lifesciences (40%), Dr. Reddy's Laboratories (38%), Glenmark Pharma (35%), Sun Pharma (30%) and Cipla (24%), could remain sensitive to further policy developments, particularly if tariffs are eventually implemented.
However, not every company faces the same level of risk. Aurobindo Pharma is viewed as relatively better positioned because it already has a meaningful manufacturing footprint in the US, allowing it to potentially benefit if domestic production receives policy support.
Sun Pharmaceutical Industries, which has been expanding its US presence through acquisitions, and Senores Pharma, which also has US manufacturing exposure, could similarly be better placed if the policy encourages local manufacturing.
On the other hand, Dr. Reddy's Laboratories, Lupin, Cipla and Zydus Lifesciences may witness near-term sentiment pressure. While all have some manufacturing presence in the US, they continue to rely significantly on India-based production for supplying the American generics market. Biocon could also remain under the scanner as a large part of its biosimilars and generic products are manufactured in India and Malaysia.
Meanwhile, Alkem Laboratories and Torrent Pharmaceuticals are expected to see a relatively limited impact. Alkem's US generics business contributes a smaller share of overall earnings, while Torrent has relatively modest dependence on the US generics market.
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