Trump Tariffs: Bitter Pill For Sun Pharma? Goldman Sachs Explains Why The Drugmaker May Face Pressure

Indian drugmakers are unlikely to take a major hit from the pharma tariffs imposed by US President Donald Trump, though Sun Pharmaceuticals Ltd. could see greater pressure, according to Goldman Sachs.

Last week, Trump announced a sweeping 100% tariff on branded and patented drugs imported by the United States, though the duty won't be applicable if the manufacturer is actively looking to set up a plant in the country.

In its latest note, Goldman Sachs has said the move won't have too much of an impact on Indian pharma companies, as a majority of them rely on generics as the main revenue stream.

The generics, for now, are exempt from the tariffs, as they account for 90% of prescriptions in the United States. The country, in fact, relies heavily on Indian drug manufacturers for generics, the note said.

However, Goldman Sachs believes Sun Pharma could face pressure as the company has a significant presence of speciality drugs in the US.

“We see limited impact to earnings of our coverage, although Sun generates significant revenue from US speciality,” the report said.

Sun Pharma's speciality products contributed a “mid-to-high teens” share in the company's FY25 revenue, and many of those drugs are made by contract manufacturing organisations outside the United States. Such products could come under the newly announced tariffs, unless exempted by bilateral trade agreements, Goldman Sachs noted.

The firm added the impact of CDMOs will likely remain muted as well, as export of drug substances and intermediates constitutes a small portion of overall sales. In fact, many CDMO shipments operate on a free-on-board, meaning the tariff overhang is often left with US importers.

Nevertheless, Goldman Sachs did caution that the recent tariff overhang “puts pressure on valuation multiples given lower earnings visibility," at least until more clarification emerges.