Indian Pharma Stocks Drop as Trump Tariff Letters Cause Concerns

The shares of Indian pharma companies dropped on July 8 as US President Donald Trump sent tariff letters to several countries, reigniting investor concerns. The Nifty Pharma index fell nearly 1 percent in the morning.

Trump issued letters with new tariff rates to around 14 countries on July 7, effective from August 1. India is in talks for a trade deal with the US, but certain trade subjects are still contentious. The tariff letters and expectations of more may have raised worries about India's trade deal.

Pharma companies rely heavily on US exports, so Trump's tariffs could hurt their margins, impacting pharma stocks. Aurobindo Pharma, Lupin, Dr Reddy's Labs, and others saw share prices drop.

Some companies like Divi’s Labs and Mankind Pharma were trading positively. The pharma index extended losses for the second day, influenced by bearish analyst notes. Macquarie downgraded Aurobindo Pharma and Dr Reddy's Labs.

Analysts suggest that Indian pharma companies could benefit from Trump's tariffs due to reduced reliance on Chinese pharmaceutical inputs. India's compliance track record and expanding API base may position it well for this shift.

However, challenges like 'Buy America' policies and regulatory stringency may impact the sector. Market participants should expect selective outperformance among Indian pharma players.

According to the source: Moneycontrol.