Trump tariff: Pharma stocks Aurobindo, DRL, Lupin, Sun Pharma in focus today; here's why

Pharma stocks such as Aurobindo Pharma, Dr Reddy’s Laboratories, Lupin, Sun Pharma, and Zydus Life are in focus on Wednesday, as the US President Donald Trump in a fresh statement threatened to impose 200 per cent tariff on pharmaceutical imports into the US.

Stock analysts noted that Indian companies like Zydus, Dr Reddy’s Labs, Lupin, Aurobindo, and Sun Pharma are heavily reliant on the US market – with US sales contributing 30-50 per cent of their total sales. 

Impact on Indian pharma cos
Indian company already operating on thin margins in the US generics may struggle to absorb costs without passing them on to US consumers or insurers and face heightened risks of margin compression, analysts believe.  

The negotiation for tariff pass-on will be challenging, given multiple stakeholders involved such as manufacturer, Pharmacys, Benefit Mangers, wholesalers, retailers, and private and government insurers.

Moreover, relocating manufacturing base to the US is economically unviable due to high operational costs and lengthy construction as well as regulatory timelines (3-5 years to operationalised plant).

Pharma company & US revenue forecasts
Nomura in April estimated Sun Pharma US sales at $2.1 in FY26 and $2.3 billion in FY27. It forecast DRL's US revenues at $1.5 billion in FY26 and $1.1 billion in FY27. Cipla's dollar revenues are seen at $900-950 million in FY26 and FY27. Nomura estimated Lupin's dollar revenues at $1.1 in FY26 and $0.96 billion in FY27. Nomura said Zydus’ US revenues could be at $1.3 billion in FY26 and $1.2 billion in FY27, with very limited production in the US. It is the largest Indian generic company with US sales 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, it suggested in an April note.

Trump's 200% tariff
Trump on Tuesday said he may impose up to 200 per cent tariffs on pharmaceuticals imported into the US very soon. 

“They’re going to be tariffs at very high rate, like 200 per cent,” Trump said during a Cabinet meeting. But he suggested that those levies would not go into effect immediately, saying he will “give people about a year, year and a half.”

The details on pharmaceutical tariffs are expected to come by the end of the month. The US depends on the low-cost generics manufactured in India, which helps its annual healthcare spending. 

Unlike generics, where US has a very high dependency  on India, US is not as dependent on India for biosimilars. Hence, for biosimilars, it will not be easy to pass on higher tariffs to US patients, anlaysts said recently.