loader2
Login Open ICICI 3-in-1 Account

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

Trump's proposal of 25% tariff on India pharma products

ICICIdirect Research 21 Feb 2025 DISCLAIMER

Pharma stocks are under some pressure on account of the trending news of imposing of 25% tariff on Indian Pharma imports into the US. The expectation has started building up since the last one month with BSE Healthcare Index falling 6-7% during the period.

India pharma exports to US for FY24 stood at $ 8 billion which is ~around 30% of total India pharma exports.

We believe the move is likely to impact more to the US consumers as currently, Indian generic drug imports accounts for 40-45% of the total generic Pharma sales in the US in volume terms. Imposing a tariff on these imports will lead to unsustainable margin squeezing for the Indian pharma players so they are likely to pass on the tariff to the end consumer leading to increase in drug prices.

Secondly, there aren’t other alternatives for generic drugs globally other than India and China to fill the vacuum in case most of the Indian players decide to vacate the space.
Although most of the Indian players do have plants in the US, scaling them up will require substantial investment and long gestation period.

Lastly, the US is already facing drug shortages which has touched almost 270 in Q3. This is has gone up due to intense scrutiny by the USFDA in the world.

Considering these aspects, we believe there will some amicable solution on cards. Without this, the generic drug prices in the US are expected to rise as most of the players will pass on the tariff hike to the ultimate users. Preferred Picks – Sun Pharma, Target Price - ₹2185; Cipla, Target Price - ₹1795

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere