Pharmaceutical stocks witnessed sharp selling pressure on Wednesday after US President Donald Trump proposed a phased tariff structure on imported generic medicines, sparking concerns over the long-term outlook for companies that rely heavily on exports to the United States. 

The announcement prompted investors to book profits, pulling the Nifty Pharma index down nearly 2% during intraday trading, although it later recovered part of its losses. The broader Nifty 50 also traded lower, but the pharma index underperformed following the policy announcement.

Leading drugmakers including Glenmark Pharmaceuticals, Biocon, Ajanta Pharma, Zydus Lifesciences, Cipla, Piramal Pharma, Aurobindo Pharma, Lupin, Sun Pharmaceutical Industries, Wockhardt and Gland Pharma registered declines as investors evaluated the possible impact of the proposed tariffs on future earnings. 

Despite Wednesday’s weakness, the sector has remained one of the strongest performers in 2026, with the Nifty Pharma index significantly outperforming the benchmark Nifty 50 and reaching a record high earlier this month.

Under the proposed policy, imported generic medicines will continue to enter the US without tariffs until August 2028. Companies that fail to establish manufacturing operations in the US by then could face a 100% import tariff, which would rise to 200% from August 2029. 

The proposal is designed to encourage domestic pharmaceutical manufacturing while leaving patented and innovative medicines outside the scope of the new tariff framework. Although the policy is yet to be implemented, analysts believe it could reshape global supply chains and force exporters to reassess their manufacturing strategies.

Brokerage firms have cautioned that Indian pharmaceutical companies with substantial exposure to the US generics market, including Aurobindo Pharma, Dr. Reddy’s Laboratories, Gland Pharma, Granules India and Zydus Lifesciences, could face near-term market sentiment pressure. 

However, the two-year transition period gives companies time to expand US manufacturing, optimize supply chains or explore alternative growth strategies. Recent regulatory updates over the past six months, including product launches, US FDA-related disclosures and business expansion initiatives by several Indian drugmakers, highlight that the industry continues to strengthen its global presence despite evolving policy risks.

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