Nifty Pharma extends losses for a fifth session as generics players fret over tariff deadline
Shares of pharma companies were under selling pressure on April 1, pushing the Nifty Pharma index down by over 2 percent, marking the fifth consecutive session of losses on worries over the potential impact of US President Trump's reciprocal tariffs set to take effect from April 2.
India's domestic pharmaceutical companies have strong exposure to US, with major portion of their revenue accruing from exports. Currently, US charges nearly zero duty on pharmaceutical imports, while India imposes around 10 percent tax on pharma imports from US. Domestic pharma companies are fearful of any potential impact due to Trump's reciprocal tariffs.
Motilal Oswal, in its latest report, has said that pharma is one of the most vulnerable sectors to US reciprocal tariffs. However, it said that the overall impact of the tariffs on India's economy would be minimal. "Overall, we believe that the impact of reciprocal tariffs (assuming full product-level reciprocity) on India will be limited on a national basis. India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP," MOSL said.
International brokerage Jefferies has however said that India's generic pharma players may escape any serious action by the Trump administration owing to fears of drug price hikes in America, though some players like Zydus and Dr Reddy’s are vulnerable due to higher US exposure.
IPCA Laboratories shares were the top loser on the index, falling over 7 percent to trade at Rs 1,393 apiece. J B Chemicals and Pharmaceuticals shares meanwhile dropped nearly 5 percent to hover around Rs 1,550 apiece. Divi's Laboratories and Lupin were trading nearly 4 percent lower, while those of Gland Pharma, Sun Pharma, Laurus Labs and Glenmark were down over 2 percent.
Aurobindo Pharma, Torrent Pharmaceutical, Zydus Lifesciences and Alkem Laboratories shares were meanwhile trading over 1 percent lower.
Cipla, Biocon and Granules shares were also trading in the red with marginal losses.
Few pharma stocks however bucked the trend to trade in the green. Dr Reddy's Laboratories, Mankind Pharma, Natco Pharma and Ajanta Pharma were trading in the green with minor gains.
US President Trump has called April 2 a 'Liberation Day' for the US economy, adding that the tariffs won't be the same for all countries, while hinting at granting relief to a 'lot of countries', without mentioning further details.Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.