Sun Pharma, Cipla Drag NIFTY PHARMA Lower After Trump’s 100% Tariff on Branded Drugs; Generics Exempt

Mumbai | September 26

Indian pharmaceutical counters opened weak after US President Donald Trump said the administration will impose a 100% tariff on any branded or patented pharmaceutical product from 1 October 2025, unless the manufacturer is “breaking ground” or “under construction” on a US facility. The carve-out does not extend to companies without US build-outs, but generic drugs are excluded from this round.

The NIFTY PHARMA index was 2.36% lower at 21,458.75, with all 20 constituents in the red. Sun Pharma was the biggest decliner (nearly 5%), while Gland Pharma, Natco Pharma, Biocon and Laurus Labs also slipped, with losses up to ~4% in early trade.

What exactly was announced

In a post on Truth Social, Trump set a 100% import tariff on branded/patented drugs starting 1 October 2025. Firms actively building a US plant — defined as “breaking ground” or “under construction” — would be exempt. Generics are not included in the tariff language.

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Why the impact is uneven

India’s US revenue is dominated by generics, cushioning the near-term hit. That said, Indian names with US specialty/innovator exposure could face pressure from the brand-focused tariff. Companies with branded portfolios include Sun Pharma, Dr Reddy’s, Lupin, Biocon, Cipla and Aurobindo. The sector reaction reflects headline risk and the time needed to assess product-mix exposure against the exemption clause.

The corridor in numbers

The US is the world’s largest pharma market, importing US$212.67 billion of products in 2024. Around 90% of US prescriptions are generics, yet they account for only ~20% of spending — underscoring that most dollars still go to patent-protected medicines. The US healthcare system is heavily reliant on India for affordable generics: India supplies ~47% of US generics; after Indian-made generic rosuvastatin entered the market, the number of Americans able to afford it doubled between 2016 and 2022. The US is India’s largest export market for pharmaceuticals, accounting for 31.35% of India’s pharma exports. India currently levies ~10% on US pharma imports, while the US does not charge reciprocal duties at present.

Policy direction and timeline

Earlier this year, Trump indicated levies on pharma could be as high as 200%, adding that companies would get about a year to onshore before facing tariffs: “We’re going to give people about a year, a year and a half to come in, and after that, they’re going to be tariffed.” White House Press Secretary Karoline Leavitt framed the move as part of reshoring critical supply chains, asking whether life-saving drugs and medicine should be made in the United States.

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What to watch next

• Implementation text: final scope, definitions and proof required for the “is building” exemption.
• Company disclosures: US capex plans, JV/contract-manufacturing tie-ups, and timing of site work.
• Stock action: whether weakness stays concentrated in brand-exposed names or broadens on sentiment until details are published.

Bottom line

The tariff targets brands, not generics — so the earnings shock looks selective. The decisive variable now is execution: firms that can evidence US build-outs may sidestep the levy, while others face a cost-of-delay until the rulebook lands.

For continuing coverage on U.S.–India trade and pharma policy, follow PL Capital.