Tariff Impact
HSBC Global sees headline risk to Sun Pharma from tariff, some hit on revenue
This story was originally published at 20:40 IST on 26 September 2025
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HYDERABAD - Though most of the Indian pharmaceutical companies are not falling under US administration 100% tariff proposal on branded and patented products, Sun Pharmaceutical Industries Ltd. is likely to feel the heat. Among the Indian drug makers, Sun Pharma has meaningful exposure to patented products in the US, which is seen as a headline risk, though the impact of the tariffs may be limited on earnings, HSBC Global Investment Research said in a report on Friday.
"Among Indian companies, only Sun Pharma has sizeable sales from patented products in the US. It reported global sales of $1,217 million from patented products in FY25 (2024-25), of which the US market accounted for $1.1 billion (85-90% of global sales), amounting to 17% of total revenue and 8-10% of consolidated EPS (earnings per share) in FY25 on our calculations," HSBC Global said.
However, the final impact depends on what risk mitigation efforts Sun Pharma takes, the report said. HSBC Global said it will await commentary from Sun Pharma on its potential mitigation strategy. The brokerage maintains a buy rating and INR 1,850 target price, with no estimate changes. On Friday, shares of Sun Pharmaceutical Industries ended at INR 1,586.70 on the National Stock Exchange, down 2.5% from the previous close.
US President Donald Trump has announced 100% tariff on branded and patented pharmaceutical imports, which will be effective Oct. 1. Trump took to social media platform Truth Social and said pharmaceutical companies that were constructing their manufacturing units in the US would be exempted from the fresh levies.
"Generic (off-patent) drugs remain exempt from US tariffs, hence there is no impact for other Indian companies," HSBC Global said. At present Sun Pharma's patented products are mostly manufactured by global contract development and manufacturing organisation partners. Its largest drug in patented category Ilumya, which is used to treat severe plaque psoriasis accounts 56% of the company's total patented products sales. The drug's substance is manufactured at a contract manufacturing site in South Korea, while finished dosage is made a European partner site.
"While this tariff development is broadly negative for Sun Pharma, we think the tariff impact on earnings depends on multiple moving parts--spread of supply chain (from active ingredients to Fill-Finish), IP (intellectual property) location of the brand, the use of third-party manufacturers etc.," HSBC Global said.
If tariff plans a hurdle, in worst case scenario, Sun Pharma would have to shift manufacturing to a CDMO partners with plants in the US, the report said. The company could also transfer other patented products manufacturing to its three plants in the US.
Since Sun Pharma is sitting on a cash pile of over $3 billion as of June, it could announce new capital expenditure plan or acquire a manufacturing plant in the US, HSBC Global said. However, moving supply chains, tech-transfer, plant re-purposing to align with the new products would take considerable time, may be around 6-24 months and need resources, the report added. During the June quarter earnings call, Sun Pharma management said that the company had no plans to add further manufacturing capacity in the US.
For 2024-25 (Apr-Mar), Sun Pharma reported a consolidated net profit of INR 109.29 billion on a revenue of INR 525.78 billion. The company's global specialty sales reported 17.1% on year growth in FY25 to $1.22 billion while the US formulation sales were up 3.6% on year to $1.92 billion. End
US$1 = INR 88.72
Reported by Narayana Krishna
Edited by Akul Nishant Akhoury
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