Aurobindo Pharma, Cipla, Lupin: Pharma shares gain after report of US dropping plans to impose tariffs on generic drugs

Pharmaceutical stocks rose on Thursday, October 9, after reports suggested that the United States has dropped its proposal to impose tariffs on imports of generic drugs, a decision that brings major relief to Indian drugmakers, which dominate the US generic drugs market.

The NIFTY Pharma index climbed nearly 1%, with 14 out of 20 stocks trading higher. Aurobindo Pharma was the top gainer, rising 4.5% to ₹1,119. Other notable movers included Lupin, Piramal Pharma, Laurus Labs, Sun Pharma, Cipla, Zydus Lifesciences, and Dr Reddy's Laboratories, which gained between 1–3%.

US had last moth imposed 100% tariffs on imports of branded or patented Pharmaceutical product.

The initial probe had targeted both finished generic and non-generic drug products as well as ingredients. However, President Donald Trump’s Domestic Policy Council reportedly argued that applying tariffs to low-cost generic drugs would drive up prices and even cause shortages for American consumers.

Indian pharmaceutical companies were at the centre of this debate. India is the largest single source of generic prescription drugs for the US market, accounting for 47% of all generic prescriptions filled in American pharmacies. This far surpasses domestic US producers (30% market share) and other foreign suppliers.

The decision has also calmed millions of Americans who rely on low-cost generic medications from India for conditions such as hypertension, depression, ulcers, and high cholesterol. By some estimates, Indian generics saved the US healthcare system $219 billion in 2022 and $1.3 trillion over the past decade.

Indian companies like Cipla, Sun Pharmaceuticals, and Dr Reddy’s Laboratories supply more than half of prescriptions for five of the top ten therapeutic areas in the US, including cholesterol-lowering, anti-ulcer, hypertension, depression, and nervous system drugs. Popular generic drugs such as Metformin, Atorvastatin, Losartan, Amoxicillin, and Ciprofloxacin are among the most widely exported from India and prescribed in the US.