Pharma Stocks Slide In Early Trade On Report Of Possible US Tariffs

Shares of Indian drugmakers fell sharply in early trade on Thursday after a report flagged possible steep tariffs by the US on select medicines, raising concerns over export-linked earnings. At 10:51 am, the Nifty Pharma index was down 3.24% while the Nifty 50 was down by 2.10% during the same time.

High Tariff News Dent Pharma Stocks

The decline followed a report that the administration of Donald Trump is preparing to impose tariffs of up to 100% on certain pharmaceutical products. The move aims to push companies to shift manufacturing to the US, the report said.

The proposed levies could be announced as early as Thursday. They would apply to companies that have not reached agreements with the White House, according to the report. The report said the new measures build on earlier warnings from Trump.

Last year, he had said imports of branded or patented drugs could face tariffs of up to 100% if companies did not set up manufacturing facilities in the US. The current proposal is linked to a national security investigation under Section 232 of the Trade Expansion Act of 1962, initiated in April last year, the report added.

Also Read - CBDT Clears GAAR Doubts, Exempt Pre 1 April 2017 Capital Gains

Export Exposure Weighs On Stocks

Note that the US is one of the largest markets for Indian pharmaceutical companies, especially for generic drugs. A significant share of revenue for these firms comes from American sales, making them sensitive to policy changes in that market. Stocks across the sector saw broad-based selling. At around 11 am on the National Stock Exchange (NSE):

• Biocon shares were down 5.49%

• Glenmark Pharmaceutical shares were down 4.84%

• Sun Pharma shares were down 3.2%

The developments come at a time when Indian pharma companies continue to rely heavily on the US for growth, with generic drug supplies forming a key part of their overseas business.

Sources:

NDTV Profit

The Economic Times