By: Bharat Daily Samachar Date: 26 Sep,2025

Understanding the Tariff and Its Implications

The 100% tariff specifically targets branded and patented drugs, which include high-value medicines still under intellectual property protection. These drugs typically cover complex treatments in areas such as oncology, immunology, cardiovascular diseases, and rare disorders. By doubling the cost of imported branded drugs, the U.S. government intends to encourage local manufacturing.

It is important to note that generic drugs—medicines whose patents have expired—are not subject to this tariff. Indian pharma companies are global leaders in generic drug production, supplying a large volume of affordable medications to the U.S. Therefore, while companies heavily involved in branded drugs may face pressure, those primarily focused on generics may remain relatively insulated from immediate financial impact.

Indian Pharma Stocks Most at Risk

The impact of this tariff varies widely depending on each company’s product portfolio and reliance on the U.S. market. Here’s a closer look at some of the most exposed companies:

1. Dr. Reddy’s Laboratories

Dr. Reddy’s is among the Indian companies most vulnerable to the new tariff. The company has a strong presence in the U.S. with several branded drugs for cancer, dermatology, and other specialty therapeutic areas. Since a significant portion of revenue comes from these products, a 100% tariff could severely affect profitability. Analysts expect Dr. Reddy’s to explore alternative strategies, including shifting focus toward generics or expanding production in countries that are exempt from the tariff.

2. Sun Pharmaceutical Industries

Sun Pharma is widely recognized for its generic drugs, but it also markets a range of branded and specialty drugs in the U.S. The tariff could impact these high-margin products, potentially affecting overall revenue. However, the company’s diverse portfolio and strong global presence might provide some cushion against the immediate financial consequences.

3. Cipla

Cipla’s U.S. revenue comes from a mix of generic and branded products. While it does have patented drugs, they account for a smaller portion of sales compared to competitors like Dr. Reddy’s. This balanced portfolio may help Cipla weather the impact of the new tariff more effectively, though investor caution remains high.

4. Biocon

Biocon specializes in biosimilars and generic formulations, sectors less affected by patent-related tariffs. While Biocon is expanding into branded drugs in international markets, its primary U.S. exposure is through biosimilars, which may shield it from immediate risks. Nonetheless, any future expansion into patented branded drugs could increase vulnerability.

5. Aurobindo Pharma

Aurobindo Pharma has largely concentrated on generics, which are not subject to the 100% tariff. This strategic focus gives the company a competitive advantage in the current scenario, allowing it to continue exports to the U.S. with minimal disruption. Investors may view Aurobindo as a safer bet compared to peers heavily invested in branded drugs.

Market Reaction

Following the announcement of the tariff, Indian pharmaceutical stocks experienced noticeable volatility. On September 26, 2025, the Nifty Pharma Index fell by approximately 2.6%, with Dr. Reddy’s and Sun Pharma among the most affected. Investors are concerned that continued pressure on branded drug exports could limit revenue growth, reduce profit margins, and impact overall market confidence.

Strategies to Mitigate the Impact

Indian pharmaceutical companies are likely to adopt multiple strategies to offset the potential negative effects of the tariff:

• Diversifying Export Markets: Expanding into emerging economies in Asia, Africa, and Latin America could reduce dependence on the U.S. market and provide alternative revenue streams.

• Increasing Focus on Generics: Since generics are exempt from the tariff, companies may prioritize these products to maintain sales volumes and profitability.

• Local Manufacturing in the U.S.: Setting up production facilities within the United States may allow companies to bypass the tariff, although this requires significant investment and time.

• Research & Development Investments: Developing biosimilars, non-patented drugs, and innovative therapies can help companies maintain a competitive edge without being directly affected by tariffs.

• Strategic Partnerships: Collaborations with U.S.-based firms could provide access to local markets while reducing the financial burden of tariffs.

Long-Term Implications

The tariff signals a shift toward protectionism in the U.S. pharmaceutical market, which could encourage domestic production and alter global supply chains. Indian pharma companies that depend on branded drugs will need to carefully reassess their U.S. strategies. At the same time, firms focused on generics may see an opportunity to gain market share as imported branded drugs become more expensive.

For investors, the situation emphasizes the importance of portfolio diversification and monitoring sector-specific risks. Stocks like Dr. Reddy’s and Sun Pharma may experience short-term volatility, whereas companies such as Aurobindo and Biocon could offer relative stability.

Conclusion

Trump’s 100% tariff on branded and patented drugs presents a significant challenge for Indian pharmaceutical exporters to the U.S. While companies with a strong presence in generics and biosimilars may remain relatively unaffected, those reliant on high-value branded drugs face a period of uncertainty. Indian pharma companies will need to innovate, diversify, and strategically invest in production and research to safeguard revenue streams and maintain global competitiveness.

As the industry adapts to this new regulatory environment, investors and market watchers should stay informed about portfolio compositions, strategic responses, and emerging opportunities in the evolving global pharmaceutical landscape.