Trump’s 100% Tariff Hike: Sun Pharma Leads Pharma Stocks Decline

Sun Pharmaceutical Industries Ltd. declined nearly 5% on Friday as Trump announced 100% tariff on the Pharmaceutical sector unless the company has manufacturing capacity in the United States.

Impact on Indian Pharma Stocks

Other Pharmaceutical stocks seeing decline are Cipla Ltd., Dr Reddys Laboratories Ltd., Lupin Ltd. and Biocon Ltd., however the impact on these companies is largely contained since the US tariffs mainly target branded and patented drugs, where multinational companies like Pfizer Inc. and Novo Nordisk Inc. dominate.

Complex Generics and Specialty Drugs Under Scrutiny

It is yet unclear whether complex generics and specialty drugs from India could also face scrutiny. Sun Pharmaceutical Industries and Biocon are key branded players in the US.

Sun Pharma’s US Exposure

Sun Pharma may have some impact until it announces its US capex plans. It exports specialty drugs like ILUMYA, CEQUA, WINLEVI and ODOMZO. This category contributes 19% to overall revenue.

In FY25, Global Specialty sales rose by 17.1%, reaching $1,216 million. A significant contributor to this growth was ILUMYA, which saw a 17% increase in global sales, totaling $681 million for the year. Additionally, Specialty R&D accounted for 36% of the company’s total R&D spend in Q4FY25.

Stock Price Movement

The scrip rose as much as 4.88% to Rs 1,548 apiece. It pared gains to trade 2.94% lower at Rs 1,579.60 apiece, as of 09:37 a.m. This compares to a 0.50% decline in the NSE Nifty 50 Index.

It has fallen 16.79% in the last 12 months. Total traded volume so far in the day stood at 1 times its 30-day average. The relative strength index was at 39.

Analyst Ratings and Price Target

Out of 44 analysts tracking the company, 35 maintain a ‘buy’ rating, four recommend a ‘hold,’ and five suggest ‘sell,’ according to Bloomberg data. The average 12-month consensus price target implies an upside of 22.1%.

Indian Stock Market Outlook

The Indian stock market has been volatile in recent times, with the NSE Nifty 50 Index experiencing significant fluctuations. The US trade policy and tariff hikes have added to the uncertainty, affecting investor sentiment and stock prices.

However, the Indian pharma sector has been a bright spot, with many companies experiencing growth in their US operations. The sector is expected to continue growing, driven by increasing demand for generic and specialty drugs.

Conclusion

In conclusion, the 100% tariff hike announced by Trump has led to a decline in Sun Pharma and other Indian pharma stocks. However, the impact is largely contained, and the sector is expected to continue growing in the long term.

Investors should keep a close eye on the US trade policy and its impact on the Indian stock market. They should also consider the growth prospects of the Indian pharma sector and the companies operating in it.

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