Pharma stocks were given a beating on Wednesday, declining sharply due to uncertainty over U.S. import duties. Nifty Pharma index decreased by 2.54% during the day's morning session, closing at 20,437.50, and the Nifty Healthcare index wasn't far behind, declining by 2.34% to 13,153.20.
Among the top losers in the Nifty 50, the pharma shares were the biggest losers. Leading the decliners were the shares of Dr. Reddy’s Lab falling by 2.71% to ₹1,165, followed by Sun Pharma falling by 2.15% to ₹1,664.95. Cipla also fell by 1.72% to ₹1,456.65.
But the damage didn’t stop there—some pharma stocks saw even steeper losses. Aurobindo Pharma took a massive 9.5% plunge to ₹1,052.70, Lupin fell 6% to ₹1,892.75, and Zydus Lifesciences dropped 6.5% to ₹855.10.
What’s Causing the Selloff?
The sharp dip is reacting to the U.S. President Donald Trump's announcement that his administration is considering the imposition of a tariff of 25% for imported medicine, including industries like cars and computer microchip imports. Although the timeline has not been given, the tariff will increase "very substantially over the next year" said Trump and implied business will discover the transition period for moving manufacturing here is not worth the risk.
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For Indian pharma players, the market leader here, this is something serious for them to worry about. A sudden rise in tariff can make the business expensive and can also impact the margins, triggering investors' fear and the market's reaction here today.
With uncertainty hanging over the sector, all eyes will now turn towards the next steps from the U.S. administration. Whether the pharma giants will find the capability to work around these potential tariffs, or will pay the price even more over the long run, remains to be seen.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It does not constitute legal, financial, or professional advice.
