US President Donald Trump announced on Tuesday that his long-promised tariffs on pharmaceutical drugs will be unveiled "very shortly,” during a fundraising gala hosted by the National Republican Congressional Committee.

The announcement had immediate repercussions as it triggered a sharp sell-off in pharmaceutical stocks, with major Indian drugmakers among the worst hit.

Speaking at the event, Trump reiterated his long-standing criticism of the United States’ reliance on foreign pharmaceutical production.

“We are going to be announcing very shortly a major tariff on pharmaceuticals,” he declared. “Once we do that, they’re going to come rushing back into our country, because we’re the big market.”

Trump emphasised that the US no longer manufactures many of its own medicines, a vulnerability he highlighted during a similar address in March.

“If we have problems like wars or anything else, we need steel, we need pharmaceuticals,” he said.

But his administration has signalled that they’ll use so-called section 232 powers to enact the levies, though they haven’t launched the prerequisite investigation.

Pharma shares nosedived, with Gland Pharma experiencing the steepest drop of 6 per cent, falling to Rs 1,340 on the BSE.

Aurobindo Pharmaceuticals and Dr Reddy’s Laboratories followed with declines of 5 per cent and 4.2 per cent.

All 20 constituents of the Nifty Pharma index were trading in the red, dragging the index down 1.7 per cent and contributing to a 0.52 per cent fall in the broader Nifty 50 benchmark in Wednesday trade.

Other major losers included Grand Pharma, Lupin, and Zydus Lifesciences, which plunged between 3 per cent and 5 per cent. Heavyweights Sun Pharma and Cipla also declined, slipping 1.69 per cent and 1.87 per cent respectively.

India, a global leader in the production of generic drugs, stands to be significantly impacted by any US tariffs.

The United States is the largest market for Indian pharmaceutical exports, accounting for roughly one-third of the country’s total pharma exports.

As per Economic Times report, in 2024, India's pharmaceutical exports were valued at USD 12.72 billion, making it the country's largest industrial export sector.

Trump underscored this trade imbalance in his remarks: “Tariffs on pharma will be there because we don’t make our own pharma drugs; they are made in another country. The same packet in the US is priced at USD 10 or more. We are going to tariff pharma in such a way that companies will come rushing to us very soon. The advantage we have is, we are a very big market.”

Which Indian pharma companies to be affected

Currently, Indian pharmaceutical exports to the US—primarily comprising low-cost generics—attract little to no levies. In contrast, India imposes around 10 per cent tax on pharmaceutical imports from the United States.

Indian pharmaceutical companies play a vital role in the US healthcare ecosystem, with generics accounting for four out of every ten prescriptions filled in the US in 2022.

As per Reuters, several major Indian pharma firms derive a substantial portion of their revenues from the American market.

Biocon earned 44 per cent of its revenues from the US in the fiscal year ended March 2024, while Lupin generated 37 per cent from the region. Sun Pharma, India’s largest drugmaker, made 32 per cent of its total revenue from US sales. Laurus Labs reported 17 per cent of its earnings from North America.

Other key players with significant exposure to the US market include Dr Reddy’s, Aurobindo Pharma, Zydus Lifesciences, and Gland Pharma.

The looming tariff announcement comes on the heels of Trump's recent imposition of "reciprocal" tariffs on multiple countries, sparking volatility in both US and global stock markets.