Pharma stocks such as Sun Pharma, Dr. Reddy’s Labs, and Divi’s Labs plummeted on 26th August. This occurred after US President Donald Trump vowed to slash drug prices in the US by an unprecedented 1,400–1,500 per cent (a figure practically impossible as reductions cannot exceed 100 per cent).

The move could make exports to the US uncompetitive. Earlier, Trump had written to leading global drugmakers — including Johnson & Johnson, Pfizer, AstraZeneca, Bristol Myers, GSK, Merck, Novartis, Roche, and Sanofi — demanding price cuts by 29th September.

Trump’s latest remarks come as his administration adopts a tougher stance on drug pricing. Additionally, they plan to impose higher tariffs on medicines imported from India and other countries.

In letters to major pharma companies, Trump demanded “most-favored-nation” pricing for all Medicaid patients. This means the US must get the lowest global rates. He set a 29th September deadline for companies to slash prices.

India–US Pharma Trade

Pharmaceuticals are a key component of India’s exports to the US, valued at $11 billion in FY24. This is approximately 12% of the country’s total merchandise exports. The US accounts for nearly one-third of India’s $31 billion in pharmaceutical exports. Overall, the US imports $180 billion worth of drugs each year, with India contributing 6%. Ireland (28%) and Germany (21%) are the biggest suppliers. Currently, pharmaceutical products are not covered under the US’s new penal tariffs effective from 7th August and 27th August, 2025.

Pharma Stock Picks

In Q1, US sales of B&K’s coverage pharma companies fell 2% to $2.5 billion. Lupin (+24%) and Torrent Pharma (+16%) outperformed, while others reported flat to marginally lower sales.

At 1:30 PM, Sun Pharma slipped 3.15% to Rs 1,604.50. Dr. Reddy’s Labs fell 1.44% to Rs 1,265.40. Additionally, Divi’s Labs was down 0.77% at Rs 6,200.50 on NSE.

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