With a large portion of pharma revenues coming from US exports, the risk of increased tariffs has led to margin worries and market pullback.

Indian pharmaceutical industry is particularly vulnerable to trade policy changes due to its significant dependence on exports to the US

08 Jul 2025 CHENNAI: Indian pharmaceutical stocks fell sharply on Tuesday (July 8), following renewed fears of US trade tariffs. The Nifty Pharma index dropped nearly 1% to around 22,159 in early trade. Key stocks dropped in morning trade included Aurobindo Pharma (down 3% to ₹1,147), Lupin (3% to ₹1,925), Dr Reddy’s and Zydus Lifesciences (down 1.6% each), Granules India, Sun Pharma, Cipla and Torrent Pharma (down 1%). On Monday (July 7), US President Donald Trump issued letters to about 14 countries—including major trading partners—announcing new import tariffs, effective from August 1. Additional letters are expected later in the month. This move reignited fears among Indian investors, particularly as India is still in the process of negotiating a trade deal with the US. The fear is that India may also receive a similar tariff letter before a deal is finalised.

Impact on pharma sector

The Indian pharmaceutical industry is particularly vulnerable to such trade policy changes due to its significant dependence on exports to the US, which account for 30–40% of its revenue. Higher tariffs could reduce profit margins, lower competitiveness, and result in market share losses. While India and the US have been working on a “mini trade deal,” certain unresolved issues have delayed its announcement. The timing of the tariff letters, before the deal is finalised, has increased anxiety among Indian exporters and markets.

Analysts expect short-term volatility in pharma stocks.

Companies with a diversified global presence and strong compliance with US Food and Drug Administration standards may fare better. The broader BSE Healthcare index also saw pressure. Previous tariff threats earlier in 2025 also caused temporary declines in pharma stocks, suggesting markets are highly sensitive to such developments.

Investor Outlook

The situation remains uncertain until there is clarity on whether India will receive a tariff letter and how trade negotiations progress. Investors are keenly watching for updates on India-US talks. Pharma companies with robust fundamentals, diversified markets, and regulatory stability may offer better resilience in this volatile environment. The sector’s outlook will depend heavily on the outcome of ongoing trade talks between India and the US.