Pharma stocks rise up to 5% as US exempts select specialty drugs from 100% tariff; Mankind Pharma, Dr Reddy’s lead
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Pharma stocks emerged as the top-performing sectoral indices in an otherwise weak market on Tuesday, with the Nifty Pharma rising nearly 1% after the US exempted select specialty pharmaceutical products and ingredients from its 100% tariff regime.
In an overnight development, the US exempted select specialty pharmaceutical products and associated ingredients imported from India and 19 other countries from the 100% tariff. The move is likely to offer relief to a segment of Indian drugmakers just as the broader levy on certain patented medicines came into effect.
Cheering the news, the Nifty Pharma rose up to 1%, outperforming the benchmark Nifty50, which fell as much as 0.75% in intraday trade to hit a low of 22,569.
Among individual stocks, Mankind Pharma led the gains, rising 4.86% to ₹2,554. Gland Pharma followed, climbing 4.07% to ₹3,013.90, while Dr Reddy’s Laboratories gained 2.04% to ₹1,245.90.
Other notable gainers included Glenmark Pharmaceuticals, up 2.20% to ₹2,376.80; Alkem Laboratories, up 2.26% to ₹5,292; and Abbott India, which gained 2.23% to ₹27,335.
Ipca Laboratories rose 2.81% to ₹1,973.30, while Sun Pharma gained 0.85%, Lupin 0.57%, Aurobindo Pharma 0.57% and Cipla 0.23%.
On the other hand, Divi’s Laboratories fell 0.37% to ₹9,515, while Laurus Labs declined 0.18%. Biocon slipped 0.03%, and has declined 7.8% over the past month.
Why pharma stocks surged today?
Market sentiment was lifted after the US Commerce Department identified India among 20 jurisdictions eligible for zero-tariff treatment for qualifying specialty pharmaceutical products. The exemption covers categories including medicines for rare diseases and infertility, while the broader US tariff framework applies a 100% duty to specified patented pharmaceutical products and associated ingredients.
Under the framework, certain specialty medicines and their associated ingredients will attract zero tariff. The exempt categories include drugs for rare diseases, fertility treatments, cell and gene therapies, antibody-drug conjugates, plasma-derived therapies, nuclear medicines and certain animal-health products. Generic pharmaceutical products and associated ingredients are not subject to the Section 232 pharmaceutical tariffs.
The exemption assumes significance for Indian pharmaceutical companies with exposure to specialty medicines and contract development and manufacturing services (CDMO), where companies manufacture drugs or pharmaceutical ingredients for global innovators.
The US administration had announced a 100% ad valorem tariff on certain patented pharmaceuticals and associated ingredients in April as part of efforts to encourage domestic manufacturing. The tariff took effect on July 31 for companies specified in an earlier list and from September 29 for other companies, although different rates and exemptions apply to certain jurisdictions and products.
Indian CDMO players with exposure to specialty and innovative drug supply chains include Divi’s Laboratories, Syngene International, Aurigene Pharmaceuticals and Laurus Labs, while Sun Pharma and Lupin also have dedicated CDMO businesses.
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