Nomura: Indian Pharmaceuticals — Trump Tariffs Hit Patent Drugs, Generics and Biosimilars Exempt
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
The United States announced new tariffs on April 2, 2026, imposing up to 100% ad valorem duties on imported patent drugs, while exempting generics and biosimilars. This resolution ends prolonged policy uncertainty and is broadly positive for the Indian generic pharmaceutical industry. Drugs originating from allied nations with trade agreements, such as the EU, Switzerland, and South Korea, are subject to a lower 15% tariff, while the UK faces a 0-10% rate. Thirteen major pharmaceutical companies have secured agreements with the US government, granting them zero tariffs until January 2029. Conversely, companies like Pfizer and GSK face a 20% tariff.
For Indian drugmakers, the exemption on generics and biosimilars mitigates direct impact. However, Sun Pharmaceutical Industries faces a 15% tariff on its US patent drug sales, which exceed $1 billion and are primarily manufactured overseas. Nomura estimates that if Sun Pharma fully absorbs this tariff, it could reduce its FY28 net profit by approximately 5%. The company may build inventory before the tariffs take effect in late September 2026.
Indian CDMOs face potential long-term pressure to establish US manufacturing. Nomura maintains Buy ratings on Sun Pharma, Zydus Lifesciences, and Alkem Laboratories, citing their diversified portfolios and existing US-based facilities.