Pharma stocks: Shares of Indian pharma companies declined a sharp decline today. US President Donald Trump has also warned to impose 25% tariff on pharma with semiconductor and auto. Due to this news, the Nifty Pharma Index declined a big decline and shares of many veteran companies dives up to 10%. After all, what will be the impact of this statement of Trump on Indian pharma companies? How much can their profits be affected and what strategy should investors adopt further? Let’s know in detail!
America is the largest pharma market in the world. Trump has warned that he will impose 25% tariffs on pharma products coming here. Trump said that “it would be 25 percent or more and it will be increased further in a year.” This one statement by Trump today shattered shares of pharma companies and saw heavy selling in them.
Aurobindo Pharma’s stock fell to 10% during trading to close to its 52-wheel, although it later recovered a little recovery. Cipla and Lupin saw a decline of 1% and 2.5% respectively. Ajanta Pharma went down to 3%, while Zydus Lifescienes saw a decline of up to 4%. Shares of Dr Reddy’s and Sun Pharma were also broken up to 2% during trading.
But some pharma stocks remained untouched by this decline. Divi’s Laboratories and Torrent Pharma saw a rise of up to 2%. This happened because Global Brokerage Macquariyari said in a recent report that these companies can benefit from CRDMO (Contract Research & Development Manufacturing Organization) segment.
Now the question arises that if 25% tariff of Trump is applied, then what will be the effect on Indian pharma companies? India supplies most generic medicines to America. More than 40% of generic drugs sold in the US market are made by Indian companies. If the tariff on them increases, it will directly affect the profits of Indian pharmaceutical companies.
The US is already pressurizing Indian pharma companies to reduce pricing pressure. Increasing tariffs can have a negative effect on their profits, Ebitda, profit margin. Also, on the basis of prices, the dominance can also end on the basis of their competitors.
Apart from this, if these tariffs are applied, then Indian companies may also have to change their strategy. Indian companies can again find opportunities to increase their business in Europe, Africa and domestic markets. Some companies may also consider setting up manufacturing plants in the US, so that the effect of tariffs can be avoided.
Trump’s tariff may also affect trade between India and the US. America is the largest trading partner in India. In 2023, trade between India and America crossed $ 117 billion. The most important thing is that America is the only country with which India’s trade remains in the surplus. Due to this, we also earn a lot of US dollars.
But now Trump is thinking something else. Anyway, the performance of Indian pharma companies has been weak so far this year. The Nifty Pharma Index has fallen by about 11 per cent so far this year. Whereas the Nifty has fallen down only 4 percent during this period. In 2024, India’s Pharma Export was $ 8.73 billion, which was 16% more than the previous year.
Maquarery says that in this ups and down time, more pressure can be seen in their shares of pharma companies which have more dependence on America. Brokerage said that companies investing in R&D and CRDMO segment may be a good opportunity for long -term investors.
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