Pharma Stocks and Trump's Proposed 35% Tariffs: Potential Impact on Sun Pharma, DRL, and Aurobindo
Nomura believes pharma tariffs will not be implemented today but may be delayed to a future date. The US could reiterate its position on tariffs for drugs made outside of the US at a later date, according to the report.
Pharma stocks have been in the spotlight today, ahead of US President Donald Trump’s ‘Liberation Day’ where he will announce reciprocal tariffs for US imports from all countries and sectors. Indian generic pharma firms, including Dr Reddy's Labs, Aurobindo Pharma, Zydus Lifesciences and others, may be the ones to suffer.
The domestic pharma industry could be subject to a 35% tariff on drugs, which includes a 10 percent reciprocal country tariff and a 25-percent sector-specific tax. The WTO data shows that the average U.S. tariffs on Indian pharmaceuticals impose on US products are 12 percent, while the US imposes 2.2% on Indian products.
What will the impact of US tariffs be on India's top drug exporters?
Sun Pharma
Nomura estimated Sun Pharma impact US Sales at $2.1 billion in FY26 and $2.3 in FY27. Specialty brands account for 55-57% of revenues. Sun Pharma believes that 10 percent of its US specialty revenue is produced in the US. Levulan is the main product. 90% of specialty products are manufactured outside the US.
Dr Reddy's Labs
Nomura estimated Dr. Reddy’s Laboratories (DRL) US revenues to be $1.5 billion for FY26 and $1.1 million for FY27. It estimated that products manufactured in the US would contribute less than 15% to FY27 revenue.
It said that certain products like Suboxone were currently formulated in America, adding that Dr Reddy's was more affected by the US market due to its high dependency.
Cipla
Nomura estimates Cipla's dollar revenue at $900-950 millions in FY26 and FY27. It said that the company's Invagen operations in the US will likely contribute 25-30 percent to US revenues. After regulatory issues at FDA regulations on Indian drugs manufacturing sites, the company has expanded its US manufacturing.
Lupin
Nomura estimated Lupin’s dollar revenue at $1.1 billion in FY26 and to be $0.96 billion for FY27. According to the company, Lupin's manufacturing sites in the US contribute revenues of $70-80 millions. Nomura stated that products made in the US would contribute 6 to 7 per cent of FY26/FY27 revenue.
