Pharma Stocks Slide On Trump Tariff Fears; Nifty Pharma Index Drops

Indian pharmaceutical stocks took a hit on May 6, 2025 as the Nifty Pharma Index dropped 1.8 per cent in early trading, rattled by reports that US President Donald Trump may soon impose tariffs on pharmaceutical imports to the US.

Aurobindo Pharma, Cipla, and Lupin were among the leading losers. The index opened at 21,672.85, lower than Monday’s close of 21,775.75, and slid further to 21,359.30, a 1.92 per cent drop.

Market sentiment turned cautious following news that Trump could announce new pharmaceutical tariffs within weeks. According to a Reuters report, Trump signed an executive order on May 5, 2025 aimed at accelerating the approval process for US-based pharmaceutical plants. The move is part of a broader effort to incentivise domestic drug production.

The order reportedly directs the US Food and Drug Administration (FDA) to streamline plant reviews and work more closely with American manufacturers to support early-stage development, even before facilities become operational.

Indian pharma companies, many of which rely heavily on US sales, were immediately impacted. Aurobindo Pharma, which derives a significant portion of its revenue from the US market, was the hardest hit, with its shares tumbling over 3 per cent. Other major players, including Lupin, Cipla, Sun Pharma, Dr. Reddy’s Laboratories, and Zydus Lifesciences, also faced declines. Lupin and Cipla both lost between 2 per cent and 3 per cent on fears they could face trade barriers and pricing pressure if tariffs are implemented.

These companies, while leaving some manufacturing capability in the US, continue to produce the bulk of their drugs in India and then export them to the American market.

The Trump administration’s move toward reshoring pharmaceutical manufacturing may redefine supply chains and pricing strategies for Indian drug makers that have, in many cases, gained from cheap manufacturing and familiarity with regulations at the US FDA.