The Indian pharmaceutical sector is awaiting fresh growth triggers, with the proposed US tariff on medicines emerging as a key overhang, Vishal Manchanda, Senior Vice President–Institutional Research at Systematix Shares and Stocks, told NDTV Profit.
While he believes the tariff announcement by US President Donald Trump remains a threat for the industry, Manchanda said it is still uncertain whether such a move will eventually be implemented.
On Tuesday, US President Donald Trump announced that tariffs on imported generic pharmaceutical drugs will begin from August 1, 2026. The move has put Indian drugmakers with major exposure to the US market, including Sun Pharma, and Lupin among others, in focus.
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According to Manchanda, companies with higher exposure to the US market remain the most vulnerable if the proposed tariffs are imposed. Therefore, he remains cautious on pharmaceutical companies that derive a major share of their business from the US. However, he added that the tariff proposal should, for now, be viewed as a risk rather than a certainty, as there is no clarity on whether it will ultimately materialise.
Despite the uncertainty surrounding tariffs, Manchanda expects most pharmaceutical companies to report only low-single-digit growth in the near term. He noted that the sector is currently waiting for more catalysts that could support stronger earnings momentum and improve investor sentiment.
One segment that stands out positively, according to Manchanda, is biosimilars. He believes the category is well placed to perform over the next five years and could emerge as one of the stronger growth areas within the pharmaceutical industry.
While the broader sector may continue to look for fresh drivers, biosimilars could offer companies an opportunity to build a more sustainable long-term growth trajectory.
Overall, Manchanda said investors should remain selective within the pharmaceutical space. He continues to be cautious on companies with elevated US exposure given the uncertainty around potential tariffs, while maintaining a constructive view on the long-term prospects of biosimilars.
For the broader sector, however, he believes meaningful upside will depend on the emergence of new triggers that can revive growth and improve visibility on future earnings.
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