Pharma Stocks Slip As Trump Imposes 100% Tariffs On Drug Imports – Know Which Firms Will Be Most Affected

Pharma stocks such as Sun Pharma, Ipca Labs and Ajanta Pharma came under pressure on April 6, over fresh concerns around the US government’s latest tariff announcement on patented drugs.

Shares of Sun Pharma fell as much as 2.30 per cent to Rs 1,654.90 apiece on the NSE. Likewise, Ipca Labs fell over 4 per cent to Rs 1,426 apiece. Ajanta Pharma, Abbot India, and Piramal Pharma also fell in the 1-2 per cent range. However, on the other hand, Laurus Labs, Mankind Pharma, Cipla, Glenmark, Gland Pharma, Biocon, Torrent Pharma, and Aurobindo Pharma were in the green.

Understanding The 100% Tariff On Patented Drugs

The US President Donald Trump, on April 2, signed an executive order announcing a 100 per cent tariff on imports of patented pharmaceuticals and related ingredients, which will come into effect on July 31.

The White House said the aim of the tariffs is to reduce the country’s dependence on overseas supplies, which Washington believes could jeopardise access to critical medicines during periods of global supply chain disruptions.

Companies that have entered into a “most favoured nation” pricing arrangement and are in the process of setting up manufacturing facilities in the US to localise production of patented drugs and their ingredients will attract zero tariffs.

For firms that are investing in such onshoring efforts but have not signed a pricing agreement, a 20 per cent tariff will be charged initially, which will be progressively raised to 100 per cent over a four-year period.

Trump clarified that generic drugs will remain outside the scope of the tariff “at this time”. However, he also indicated that this exemption may not be permanent. He added that the administration could review imports of generic drugs and their ingredients, with a decision on possible curbs likely within a year.

“I have determined that it is necessary and appropriate to impose a 100 per cent ad valorem duty rate on the import of patented pharmaceuticals and associated pharmaceutical ingredients.. The Secretary [of Commerce] found that the present quantities and circumstances of imports of pharmaceuticals and pharmaceutical ingredients threaten to impair the national security and economy,” Trump said while announcing the tariff order.

This is a developing story...