Dr Reddy’s, Aurobindo Pharma: Why pharma stocks fell in early trade today?
Pharma stocks have taken a hit today, with shares of big names like Dr Reddy’s, Sun Pharma, and Aurobindo Pharma tumbling.
The development comes after US President Donald Trump said he plans to slap a 25% or higher tariff on pharmaceutical imports, making investors nervous.
The Nifty Pharma index dropped as much as 2% in early trade. Sun Pharma fell nearly 2%, Dr Reddy’s dropped as much as 4%, and Aurobindo Pharma sank almost 6%. Cipla shares also fell.
The Nifty Pharma index cut some losses later in the morning but was still down 0.7% at 11:31 am.
WHY PHARMA STOCKS ARE FALLING?
It may be noted that the US is the biggest buyer of Indian medicines. In FY24, India exported $8.73 billion worth of drugs there, a 16% rise from the previous year, making up 31% of total pharma exports.
That’s why Trump’s tariff talk has investors rattled.
On Tuesday, the US President told reporters that tariffs on drugs and semiconductor chips would start at 25% or higher and increase over time. He didn’t give an exact date but said companies would have time to build U.S. factories to dodge the tariffs.
Pharma analyst Shrikant Akolkar from Nuvama Institutional Equities told news agency Reuters that even if Indian companies set up factories in the US, it won’t be quick. They’ll need fresh approvals and face higher labour costs than in India.
Earlier this week, Sun Pharma MD Dilip Shanghvi said in an interview that if tariffs come in, drugmakers will just pass on the costs to consumers.
Pharma stocks have fallen 12% this year, while the Nifty 50 is down 4%. Investors are keeping a close eye on what happens next.
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