Trump tariff: Aurobindo Pharma, Gland, Lupin, DRL shares rally up to 7%; here's why

Aurobindo Pharma Ltd, Gland Pharma Ltd, Lupin Ltd and Dr Reddy's Labs Ltd led pharma sector gainers on Thursday, as despite levying a 27 per cent tariff on India overnight, the Trump administration made a few exemptions, including pharma sector. There were earlier fears that the US could impose as much as 35 per cent tariff on domestic generic drug makers.  
But the Fact Sheet issued by The White House cited pharma in the exempted list of 50 items. Aurobindo Pharma, Zydus Lifesciences and Dr Reddys were among pharma names with higher US revenue mix.

Gland Pharma surged 7.33 per cent to Rs 1,647.65. Nomura estimated Gland Pharma's dollar revenues at $372 million in FY26 and $393 million in FY27. The company supplies its products from sites in India. Gland Pharma was anyway relatively better placed compared to other generic companies as competition in injectable is relatively low. 

Aurobindo Pharma, the largest Indian generic company with US sales, soared 6.53 per cent to Rs 1,234.35. Aurobindo Pharma generated a revenue of $1.6 billion in Calendar 2024. The company has three manufacturing sites in the US, but the production and contribution from the sites are limited. This drug maker was expected to be hit the most by tariffs.

Lupin climbed 6.35 per cent Rs 2,137. Nomura had estimated Lupin's dollar revenues at $1.1 in FY26 and $0.96 billion in FY27. Lupin has manufacturing sites in the US that contribute $70-80 million in revenues and the products manufactured in the US may contribute 6-7 per cent to FY26 and FY27 revenues, Nomura said.

Zydus Lifesciences Ltd advanced 4.31 per cent to Rs 929.70. Nomura noted Zydus’ US sales could be at $1.3 billion in FY26 and $1.2 billion in FY27, with limited production capacity in the US. Given high dependence of US sales, the foreign brokerage had expected earnings impact on Zydus to be high if case tariffs are imposed. 

Sun Pharma climbed 5 per cent to Rs 1,802. Dr Reddy's Labs was also up 4.31 per cent at Rs 1,199.30. Against this, the BSE Healthcare index jumped 1,065.26 points or 2.59 per cent to 42,188. 

A total of 10 per cent of the Sun Pharma's US specialty sales are formulated in the US. This primarily includes production of Levulan. The remaining 90 per cent of the specialty products are formulated outside the US. "The tariffs on Canada can be higher than in other countries. The US has applied a tariff of 25% on imports from Canada. This can adversely impact the competitive strength of Taro. The overall impact of tariff for Sun Pharma is relatively low due to high contribution to profit from India and other emerging markets," Nomura had suggested earlier. 

In the case of DRL, products made in the US should contribute less than 15 per cent to FY27 revenues, Nomura estimated.