Shares of Indian pharmaceuticals companies came under sharp selling pressure on Wednesday after US president Donald Trump announced a phased tariff regime for imported generic medicines, raising concerns over the long-term prospects of Indian drug-makers that derive a significant share of their revenues from the US market.
The Nifty Pharma index emerged as the worst-performing sectoral index on the National Stock Exchange (NSE) during early trade, falling 1.85% to 25,610, while the benchmark Nifty 50 declined 169 points, or 0.70%, to 24,017.
The selloff was broad-based across the pharmaceuticals sector, with Gland Pharma leading the losses, falling 4.54%. Glenmark Pharmaceuticals declined 3%, Aurobindo Pharma dropped 2.89%, while Zydus Lifesciences fell 2.28%.
Other major drug-makers also traded in the red. Ajanta Pharma, Sun Pharmaceutical Industries, Alkem Laboratories, Dr Reddy's Laboratories, Mankind Pharma and Divi's Laboratories declined between 1.3% and 3%. Among the Nifty 50 constituents, Cipla, Sun Pharma and Dr Reddy's Laboratories figured among the top losers, shedding between 1.29% and 1.95% in early trading.
The sharp decline followed president Trump's announcement of a new tariff roadmap for imported generic medicines, intended to encourage pharmaceuticals manufacturing to shift to US.
Under the plan, imported generic medicines will continue to enjoy zero tariffs for two years from 1 August 2026. Thereafter, they will attract a 100% tariff from 1 August 2028, followed by a 200% tariff a year later.
In a post on Truth Social, president Trump said the phased tariff structure was designed to encourage pharmaceuticals companies to establish manufacturing facilities in the US.
"Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for a two year period of time, after which the TARIFF will be raised to 100% for a one year period of time, and 200% thereafter," president Trump said.
He added that the policy was intended to "RESHORE Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them."
"The objective of this Policy is to protect the people of the US," president Trump said.
The US president also said pharmaceutical manufacturing facilities were already being established across the country at an unprecedented pace.
"Pharmaceutical Facilities are being built, at a level never seen before, all over the United States of America," he said.
President Trump clarified that the new tariff timeline applies only to generic medicines and does not alter the existing policy governing patented, branded or innovative drugs.
"The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as is," he said, without elaborating further.
The announcement is expected to have significant implications for global pharmaceutical companies that export generic medicines to the US, particularly Indian manufacturers, which are among the largest suppliers of affordable generic drugs to the American healthcare system.
While the announcement provides overseas manufacturers with a two-year window before tariffs take effect, president Trump did not clarify whether companies beginning construction of US manufacturing facilities during this period would qualify for exemptions or whether commercial production would need to commence before the higher duties come into force.
The lack of operational details, coupled with the prospect of steep tariffs 2028 onwards, weighed heavily on investor sentiment, triggering a sharp selloff across India's pharmaceuticals sector.
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