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Informist, Friday, Aug. 1, 2025

MUMBAI – Stocks of pharmaceutical companies in India are expected to remain weak in the upcoming weeks due to uncertainties surrounding tariffs imposed by the US. The Nifty Pharma index on Friday dropped over 3% to 22011.70 points, with major players like Aurobindo Pharma, Sun Pharmaceutical Industries, Dr. Reddy's Laboratories, and Granules India declining around 3-5%. The downfall is largely attributed to US President Donald Trump's demand that 17 global drug majors, including Eli Lilly, Novo Nordisk and Pfizer, lower drug prices in the US. This trend is likely to continue in the near term according to an analyst at a domestic brokerage firm. 

The uncertainty surrounding the tariffs has led to concerns about the potential impact on Indian pharmaceutical exports, which accounted for 11.3% of India's total exports to the US in FY25, according to a research report by Emkay Global Financial Services. India's total exports to the US were $86.5 billion in 2024-25 (Apr-Mar), the report said.

Drug formulations and active pharmaceutical ingredients are currently excluded from tariffs, as earlier mentioned by the US government, which explicitly exempts pharmaceuticals. However, the analyst flagged the ongoing section 232 investigation into pharmaceutical imports by the US as a medium-term overhang, with the potential for pharma-specific tariffs to be announced in the coming weeks or months.

According to some media reports, the likelihood of material near-term tariffs on pharmaceuticals is low due to the structural dependence on Indian pharmaceuticals and the cost sensitivity of the US healthcare system. Larger players with manufacturing facilities in the US are likely to remain broadly insulated, while others anticipate a limited impact, with plans to pass on incremental costs to customers where feasible. 

The Nifty Pharma and Nifty Healthcare indices closed around 3% lower each, with the sector coming under pressure after President Trump announced a 25% tariff rate for Indian exports to the US. Sun Pharmaceutical Industries was down over 4% and was the worst hit in the Nifty 50 index after its bottom line for the June quarter fell 20% on year, missing analysts' estimates by a wide margin.

From a technical viewpoint, the Nifty Pharma index is likely to find support at 21850 points and immediate resistance at 22250 points with major resistance expected around 22375 levels. Some analysts see the ongoing weakness as an opportunity to buy into the pharmaceutical space, expecting robust earnings growth ahead at reasonable valuations, a fundamental analyst at a domestic brokerage firm said. 

The pharmaceutical sector in India is facing uncertainty due to potential tariffs imposed by the US. While the impact is yet to be fully determined, analysts believe that larger players with US manufacturing facilities may not be impacted badly, and some companies may pass on incremental costs to customers. 

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* Laurus Labs consol PAT surges manifold YoY in Apr-Jun

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by P. Madhu Kumar

Edited by Deepshikha Bhardwaj

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