Sun Pharma, Cipla & other pharma stocks shed over 2% as Trump announces up to 200% tariffs on generic drugs from 2028

Shares of Sun Pharma, Dr Reddy's Laboratories, Cipla, Lupin, Aurobindo Pharma, and other pharma stocks declined up to 2.5% on Wednesday after US President Donald Trump announced a phased tariff plan for imported generic medicines, giving drugmakers a two-year reprieve before sharply higher duties kick in.

Sun Pharma shares declined 2% to Rs 1,924 on the BSE, while Cipla shares declined 2.5% to Rs 1,396 per share. Lupin shares also dipped 2.5% to Rs 2,452, while Dr Reddy's slipped over a percent to Rs 1,185 per share. Zydus, Alkem and Torrent Pharma also dropped up to 2%.

In a post on Truth Social, the US President wrote that all generic drugs being brought into the US will have no tariffs for two years. Following which, the tariff will be raised to 100% from August 1, 2028 and then to 200% by August 1, 2029.


This development gains significance because Trump's earlier tariffs in the pharmaceutical sector targeted branded and patented drugs, with that policy remaining unchanged. Generic medicines were excluded from the earlier measures, despite accounting for nearly 90% of prescriptions in the US.

Also read: Trump announces new generic drugs tariff plan: No tariffs for 2 years, then 100%, and then 200%

What’s behind this?

The move is part of the Trump administration's broader push to encourage pharmaceutical companies to shift manufacturing and related infrastructure to the US.

The announcement offers temporary relief to Indian pharmaceutical companies, which generate a significant share of their revenues from the US generic drug market. The two-year tariff-free period gives Indian exporters more time to reassess their supply chains and investment plans.

While the immediate impact on exports is expected to be limited, the proposed increase to 100% and eventually 200% could significantly change the economics of supplying generic medicines to the US for companies that do not build a stronger local manufacturing presence.

How are Indian pharma companies positioned?

Aurobindo Pharma has a substantial local manufacturing presence in the US. Dr Reddy's, Lupin, Cipla and Zydus Lifesciences have some manufacturing footprint, while Alkem Laboratories and Torrent Pharmaceuticals are largely dependent on Indian manufacturing facilities and have limited exposure to US generics in terms of cash flow generation.

Biocon relies on manufacturing facilities in India and Malaysia for its biosimilar and generic products. Senores Pharmaceuticals has a local manufacturing presence catering to the US generics market.

What did Trump say?

Trump said the phased tariff structure is intended to encourage companies to set up manufacturing plants and related infrastructure in the US during the transition period. Companies that do not localise production would eventually face punitive import duties, in line with the administration's broader "America First" manufacturing agenda.

The announcement comes as the Trump administration continues to push for changes in the pharmaceutical supply chain and to reduce dependence on overseas manufacturing. It also complements the administration's most-favoured-nation drug pricing policy, which aims to bring US medicine prices closer to those in other developed economies. The policy covering patented and innovative medicines remains unchanged.

Generic medicines account for more than 90% of prescriptions dispensed in the US, according to the US Food and Drug Administration, making them a crucial part of the country's healthcare system and an important export market for Indian drugmakers.

Read more: 100% tariff threat over Russian oil could roil India-US ties

India's pharmaceutical industry has been closely tracking changes in US trade policy amid concerns about potential tariffs on medicines. Industry executives have said India's cost-efficient manufacturing ecosystem remains globally competitive, but prolonged tariff barriers could push companies to expand their manufacturing capacity in the US or rely more on contract manufacturing partnerships to maintain access to the market.

The latest decision represents a shift from earlier measures focused on branded medicines. Last year, several multinational drugmakers reached agreements with the US government that protected billions of dollars worth of pharmaceutical imports from tariffs.

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