Pharma Shares Tank After Trump’s Single Game-Changing Remark
A single comment from Donald Trump sent shockwaves through the financial markets, as pharmaceutical stocks took a nosedive in a matter of hours. Investors scrambled to assess the fallout, with the former president’s words proving once again their power to upend entire industries overnight.
Pharma Stocks Crash : Shares of Indian pharma companies, Aurobindo Pharma, IPCA Laboratories, Lupin and others fell up to 5% on Friday, April 4, after US President Donald Trump commented about upcoming tariffs on the sector. Speaking to the media on Air Force One, Trump said that pharma tariffs are going to come at levels you've never seen before. We are looking at pharmaceuticals as a separate category. We will announce it in the near future or in the not too distant future. It's still under review.
Indian pharma companies had surged on Thursday, April 3, following Trump's reciprocal tariff announcements that exempted the sector from any tariffs. However, it was clear that this was only a temporary exemption.
Trump's Tarrif Threat
There were earlier indications that sector-specific tariffs would not be part of the event in the Rose Garden on April 2. The Trump administration will investigate pharma and semiconductors under Section 232 of the Trade Expansion Act of 1962, which enables the US government, particularly the president, to take action necessary to restrict imports of goods that threaten national security.
Citi believes that pharma companies will aim to pass on the burden of tariff hikes to payers. If the cost is not passed on to the end patients, the entire supply chain will have to partially absorb the hike. The brokerage also believes that it is difficult to bear the full burden of tariffs.
According to Jefferies, it is possible to remove import duty on pharma imports from the US. India imports pharma products worth about $800 million from the US, while exports to the country are worth $8.7 billion. Shares of Aurobindo Pharma fell 6%, while shares of IPCA Labs, Lupin, Biocon and others fell by 4% to 5%.
