Blame it on Trump again! Imposing 100% tariffs on imports of certain generic drugs and formulations from India once again pulled down the markets and the sector in a bigger way.

For Indian pharma, USA is its biggest market, contributing 35-50% of revenues. A 100% tariff would either make Indian generics uncompetitive in pricing or force companies to absorb margins to stay competitive.

Dalal Street is worried  about a sharp impact on FY26/FY27 earnings guidance as margins for generics are already under pressure due to US FDA scrutiny and price erosion. A 100% tariff magnifies the problem.

The Nifty Pharma Index fell 5-6% making it the worst-performing sector. Big losers included- Sun Pharma, Dr. Reddy’s, Cipla, Lupin fell between 5 to 8%. Aurobindo Pharma, Zydus Lifesciences, Glenmark dropped sharply due to higher US dependency. Midcaps with heavy US exposure, like Alkem, Laurus Labs, Strides, Granules also tumbled 6 to10%.

In the short term, it’s a sentiment shock and one can expect volatility, with pharma likely to underperform broader indices. In medium term, selective stocks with lower exposure to US like Torrent Pharma, Abbott India, domestic-focused players, may outperform peers. And in the long term, if the tariff stay, Indian pharma will need structural reorientation, shift production to US or pivot to domestic/alt markets.