Trump Tariffs May Not Hurt Indian Companies, Says Morgan Stanley: THIS Pharma Stock An Exception
Morgan Stanley believes the impact could be limited, as far as the Indian market is concerned. However, companies like Sun Pharma could be at risk due to their speciality drug presence in the US.
United States President Donald Trump's plan to impose 100% tariffs on imported branded and patented pharmaceuticals is unlikely to hurt Indian companies, according to Morgan Stanley.
In its latest note, the firm did flag potential risks to companies that have exposure to speciality drug exposure, notably mentioning Sun Pharma.
The tariff, which was announced by Donald Trump on Truth Social, will take effect from October 1, 2025. The tariffs will apply to any branded or patented drug being imported into the US unless the manufacturer is building a plant in the country.
Morgan Stanley believes the impact of this move could be limited, as far as the Indian market is concerned. However, companies like Sun Pharma could be at risk due to their speciality drug presence in the US.
“Sun, among our coverage, is the only one with Speciality U.S. exposure but has a U.S. plant,” Morgan Stanley said, before admitting that the company's own domestic facility offers some protection.
As far as the other companies are concerned, Morgan Stanley sees minimal impact on firms like Lupin, Cipla, and Dr. Reddy’s Laboratories, as their business in the US is largely in the generic segment, which is exempt from tariffs, so far.
On the flip side, a portion of Sun's speciality business could be impacted, but that depends on how the US defines immunity for existing plants in the country.
The note goes on to ask burning questions surrounding the tariffs, including whether or not the tariffs will be applicable to Active Pharmaceutical Ingredients as well.
Finally, Morgan Stanley concludes that while there may be some short-term impact of the US tariffs, it is unlikely to be sustained in the long term as it would cause unprecedented supply-chain woes and could significantly raise costs in the industry.
