Lupin, Aurobindo, Sun Pharma fall up to 4%: Why are pharma stocks falling today?
Dalal Street witnessed a broad-based selloff in early trade on Wednesday, with the Sensex tanking more than 500 points and the Nifty slipping below the 24,050 mark.
The biggest drag came from pharmaceutical stocks after US President Donald Trump announced a phased tariff plan on imported generic medicines, raising concerns over the long-term prospects of Indian drugmakers with significant exposure to the US market.
The BSE Sensex was trading over 500 points lower, while the Nifty Pharma index dropped nearly 2%, making it the worst-performing sectoral index of the day.
The weakness in pharma stocks also spilled over to healthcare indices. The Nifty Healthcare index declined 1.72%, the Nifty 500 Healthcare index fell 1.81%, and the Nifty MidSmall Healthcare index slumped 2.14%, underlining the broad-based selling across the sector.
WHAT DID TRUMP ANNOUNCE?
US President Donald Trump on Tuesday unveiled a phased tariff roadmap for imported generic medicines.
Under the proposal, generic medicines imported into the US will continue to attract zero tariffs for two years starting August 1, 2026. However, tariffs will rise to 100% from August 1, 2028, before doubling to 200% a year later.
In a post on Truth Social, Trump said the move is aimed at encouraging pharmaceutical companies to shift manufacturing to the US. Companies that fail to establish manufacturing facilities within the prescribed timeframe could face penalties. The proposed policy does not apply to patented, branded or innovative medicines.
The announcement has put Indian pharmaceutical companies in focus as they are among the largest suppliers of affordable generic medicines to the US.
WHY ARE INDIAN PHARMA STOCKS FALLING?
The proposed tariff roadmap has sparked concerns that Indian pharmaceutical companies may eventually face higher costs or be forced to invest heavily in manufacturing facilities in the US to remain competitive.
Several leading Indian drugmakers derive a substantial portion of their revenues from the US generics market. These include Sun Pharma, Dr Reddy’s Laboratories, Cipla, Lupin, Aurobindo Pharma and Zydus Lifesciences.
Although the tariffs will not come into effect immediately, investors fear they could affect the sector’s long-term earnings outlook and profitability.
The uncertainty triggered widespread selling across the pharmaceutical space.
PHARMA STOCKS SEE SHARP SELLOFF
The Nifty Pharma index fell 1.94%, making it the worst-performing sectoral index in early trade.
Heavy selling was visible across large- and mid-cap pharmaceutical stocks.
Gland Pharma emerged as one of the biggest losers, dropping 4.33%, followed by OneSource Speciality Pharma, which declined 4.32%. PPL Pharma slipped 3.81%, Lupin fell 3.64%, Granules India lost 3.62%, Ajanta Pharma declined 3.50%, while Aurobindo Pharma dropped 2.87%. Sai Life Sciences also fell 2.75%.
The weakness extended across the broader healthcare segment. The Nifty MidSmall Healthcare index was down 2.14%, with Glenmark falling 2.60%, Biocon losing ground, Laurus Labs declining 1.33%, and several other healthcare names trading lower.
Among the benchmark stocks, Sun Pharma was down 1.33%, making it one of the top drags on the Sensex.
BROADER MARKET UNDER PRESSURE
The weakness in pharma stocks added to an already cautious market, with most sectoral indices trading in the red.
The Nifty PSU Bank index declined 1.53%, Realty fell 1.46%, Financial Services slipped 0.99%, Private Bank lost 0.97% and the IT index dropped 0.56%.
The broader market also came under pressure. The Nifty Smallcap 100 fell 0.99%, Nifty Midcap 100 declined 0.71% and the Nifty Midcap 50 lost 0.78%.
India VIX, the market’s volatility gauge, rose 3.25%, reflecting increased nervousness among investors.
While the proposed tariffs are several years away from implementation, investors are factoring in the possibility of higher costs, manufacturing shifts and policy uncertainty for Indian pharmaceutical exporters, resulting in sharp selling across the sector.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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