Pharma stocks decline up to 7%; Biocon, IPCA, Granules, Natco Pharma top losers

Shares of pharma companies continued to remain under pressure on Monday, April 7, amid trade war escalations and global market routs.

The US President on April 3 had imposed a 26% tariff on India but excluded some goods from the ambit of the reciprocal tariffs. The list includes copper, pharmaceuticals, semiconductors, lumber articles, gold, energy, and other certain minerals.

However later, speaking on the sidelines of the Air Force One event, Trump told reporters, “Pharma tariffs are going to come in at levels you have never seen before. We are looking at pharmaceuticals as a separate category. We will be announcing that sometime in the near future and not too distant future. It’s under review right now.”

The market investors became cautious following this statement.

A hint of a fresh tariff on the sector led the Nifty Pharma index to decline over 5% during the early trading hours on Monday. During the afternoon session, the sector was down 3.04%.

The top losers in the sector were Biocon (-7.29%), IPCA Laboratories (-6.43%), Granules (-5.29%), Natco Pharma (-5.25%) and Divis Lab (-3.99%).

Other heavyweights like Cipla, Zydus Lifesciences, Gland Pharma, Ajanta Pharma and Laurus Lab also tumbled as much as 3.94% on the National Stock Exchange.

Shares of Dr.Reddy’s (-1.21%), Sun Pharma (-2.75%), Glenmark (-3.21%), and Alkem (-2.95%) were also trading negative on the 50-share index.

On the S&P SENSEX index, the BSE Healthcare sector also slipped 3.54%.  

Global broking firm Jefferies recently, in a report, had said that if the US applies reciprocal tariffs, it will at best be 10% on imported Indian medicines to the US. It expects pharma companies will aim to pass on tariff increases to payors. If the costs aren’t passed onto the end patients, then the entire supply chain will have to partly absorb the impact. Key players in the US supply chain are retailers or distributors, formulation manufacturers and API or KSM suppliers to manufacturers.

The Indian equity market crashed on Monday. Both SENSEX and NIFTY50 were trading down over 4.5% during the afternoon period.