Four Indian pharma stocks that may be hit by US pharma tariff threat
Indian pharma stocks took a beating on Tuesday, 17 June, after US President Donald Trump said tariffs on pharmaceutical imports are coming 'very soon."
His comments sent shockwaves across the market, dragging the Nifty Pharma index down by over 2% intraday. It was the worst-performing sector of the day.
This isn't the first time Trump has hinted at such a move. He had dropped clues back in April, but this latest announcement has added urgency and concern.
The Indian pharma industry, which relies heavily on exports to the US for generics and speciality drugs, is now facing concerns over potential revenue disruptions. Any disruption in trade or pricing could have a direct impact on revenues and margins.
In this article, we take a look at five Indian pharmaceutical companies that could be the most affected by the proposed US tariffs.
#1 Granules India
Granules India has a presence across the pharmaceutical manufacturing value chain, including active pharmaceutical ingredients (APIs), pharmaceutical formulation intermediaries (PFIs) and finished dosages (FDs).
It produces and supplies paracetamol, metformin, guaifenesin, and methocarbamol APIs.
It has over 10 manufacturing facilities, approximately eight of which are located in India and two in the US.
The company sells its products in global markets, including the United States of America, Canada, Latin America, Europe, Asia Pacific, and India.
As per the FY24 annual report, 66% of Granules India's total revenue came from North America.
This dependence has only deepened in recent quarters with the US market contributing 79% of revenue in the March 2025 quarter, according to the latest investor presentation.
Data Source: Earnings Presentation FY25 and Q4 FY25
Given this significant exposure, any tariff-related cost increases could affect both the company's topline and margins.
On 17 June 2025, executive director Priyanka Chigurupati said that the company is currently in the final stages of completing remediation work at its Gagillapur facility. It expects this process to wrap up in the next few months, after which a USFDA re-inspection is anticipated.
Once this hurdle is cleared, Granules is aiming to launch 11 pending products in the US market, which were temporarily held back during the compliance phase.
Production had been scaled down to prioritise remediation, but the company is now preparing to ramp up volumes again as operations stabilise.
It's also working on its first major oncology product launch in the US, expected around FY28.
To support its future growth strategy, the company is prepping its Genome Valley facility to meet upcoming USFDA and European audits.
#2 Gland Pharma
Gland Pharma has become a leader in generic injectables. Its presence spans 60 countries, including the US, Europe, Canada, and Australia.
The company's business model primarily involves business-to-business, which contributes 98% of its revenue. It provides contract development, dossier compilation, and technology transfer services. The balance comes from business to consumer.
Geographically, the company has a strong presence in the US, which contributes 54% of its revenue. Its revenue in the region has grown from ₹2,585 crore in FY22 to ₹3,037 crore in FY24.
This makes the company vulnerable to tariffs.
Recently, Gland Pharma received approval from the US Food and Drug Administration (US FDA) for Angiotensin II Acetate Injection.
Since the company is the first to submit for exclusivity, it qualifies for 180 days of exclusivity for the generic drug.
#3 Aurobindo Pharma
Aurobindo Pharma has built a strong presence across more than 150 countries, manufacturing generic formulations, APIs, and injectables.
It's the largest generic drug company in the US and ranks among the top 10 generic players in eight European countries.
That's where the concern comes in. According to its FY24 annual report, half (48%) of Aurobindo's revenue comes from the US.
Data Source: Aurobindo Pharma Annual Report 2023-24
As per the company's investor presentation in March 2025, it holds the top spot in the US in terms of oral solids prescription volume, commanding a 10.5% market share in the September 2024 quarter.
So, when talk of new US tariffs on pharma imports hits the headlines, Aurobindo's heavy exposure naturally makes the stock vulnerable to a fall.
On 16 June 2025, the company announced the incorporation of a new wholly owned subsidiary, Cresedemo Pharma LLC, in the US. This move aims to further strengthen its US pharma business.
While the new entity signals Aurobindo's long-term commitment to the US market, the proposed tariffs could present near-term headwinds for the company.
Looking ahead, Aurobindo is placing a big bet on the future of biosimilars. With 14 promising products currently in the pipeline, the company is eyeing a massive US$ 50 bilion+ market opportunity.
If things go as planned, this could open up an exciting new growth path and offer some much-needed cushion against any potential policy shocks like the proposed US tariffs.
Also Read: India seeks financial details of pharmaceutical marketing practices, industry caught in a bind
#4 Dr Reddy's Laboratories
Dr Reddy's Lab is one of India's largest pharmaceutical firms in the country. The company manufactures a wide range of pharmaceuticals with expertise spanning several therapeutic areas.
Through its step-down subsidiary Aurigene Pharmaceutical Services Ltd (APSL), it's making strong strides in the CDMO space.
APSL acts as a comprehensive Contract Research, Development, and Manufacturing Organization (CRO/CDMO), offering end-to-end solutions to global pharmaceutical and speciality companies.
It has cGMP manufacturing facilities in the UK, Mexico, USA, and India, enabling it to serve a global clientele.
Despite this global footprint, a large chunk of Dr Reddy's revenue still comes from the US.
Also, the latest investor presentation of Q4FY25, shows 42% of the total revenue from the US market.
This heavy dependence on the US leaves the company exposed to the potential impact of new tariffs.
In response to increasing tariff speculation, the company has indicated a desire to consider local manufacturing in the US, through acquisitions. This will not only help reduce the risk of import duties but will also deepen its foot in one of its most important markets.
Meanwhile, Dr Reddy focuses on maintaining its growth. The company plans to launch 15-20 new products in the US every year.
Also Read: Dr. Reddy's focused on securing supply chains amid US tariff uncertainty
Conclusion
While the possibility of imports has rattled the sector, it's important to take a balanced view before making investment decisions.
There's no denying that companies with high revenue exposure to the US, like Aurobindo Pharma, Granules India, and Dr Reddy's could face near-term challenges if such tariffs are implemented. Margins may come under pressure and growth plans might require changes.
However, the long-term fundamentals of India's pharmaceutical industry remain strong.
The government is actively supporting the sector through key initiatives such as the Production Linked Incentive (PLI) Scheme for Pharmaceuticals, Promotion of Bulk Drug Parks, Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS), and the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), which aims to make quality medicines accessible at affordable prices.
Moreover, according to a recent EY-FICCI report, the Indian pharmaceutical market is poised to reach a value of around $130 billion by 2030, signalling strong growth potential.
It's important to conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.
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