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Tariffs

US Imposes 100% Tariff on "Patented and Branded" Pharmaceuticals, Uncertainty Persists

Strategic Insights

— 1 min read

The US President's announcement on social media of a 100% tariff on "patented and branded" pharmaceutical imports has rattled pharma stocks in India, amid concerns that the scope could be expanded to include complex generics, biosimilars, and other advanced formulations. Top industry officials expressed concerns about the ongoing US government investigation under Section 232 of the US Trade Expansion Act, which is expected to conclude early next year. Although Indian pharma exports mostly unbranded generic drugs and formulations to the US, several top Indian companies, including Sun Pharma, Cipla, Lupin, and Dr Reddy's, could face a hit if the tariff is expanded to biosimilars and complex generics.

Key Takeaways:

  • Indian pharma companies, such as Sun Pharma, Cipla, Lupin, and Dr Reddy's, could face a hit if the tariff is expanded to biosimars and complex generics.
  • The US government investigation under Section 232 of the US Trade Expansion Act, which assesses if pharma imports pose a threat to national security, is expected to conclude early next year.
  • The new tariff, effective October 1, will not apply to companies that have already built or are building manufacturing plants in the US.
  • Domestic generic producers in India could see near-term gains as higher prices for branded drugs push demand toward cost-effective alternatives.
  • Sun Pharmaceuticals' Ebitda could take a hit due to its growing footprint in specialty and branded products, particularly in the US.
  • The company's global specialty sales stood at $1,216 million at the end of FY25, accounting for 20% of its total annual sales.

Statistics:

  • BSE Healthcare index ended 2% down on Friday.
  • Sun Pharma's global specialty sales stood at $1,216 million at the end of FY25.
  • The new tariff, effective October 1, will not apply to companies that have already built or are building manufacturing plants in the US.
  • 15% of Sun Pharmaceuticals' total annual revenue comes from its branded medicine sales in the US.
  • The company has a well-established footprint in the US, with a production plant in Massachusetts.

Sources:

  • Suresh Subramanian, national life sciences leader at EY Parthenon
  • Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat
  • Vishal Manchanda, pharma analyst at broking firm Systematix Group
  • Times of India

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