Donald Trump's reciprocal tariff will reduce the profits!
US President donald trump has proposed to impose tariffs on imported medicines, which has created a stir in the indian pharma sector. india is the largest supplier of generic medicines in the US and this move can have a direct impact on the profits of many companies.
What is the whole matter?
Actually, the US currently imposes zero tariff on indian medicines, while india charges about 5 to 10 percent duty on American medicines. trump wants the US to also impose tariffs as much as India. That is, the US will also impose tariffs up to 10 percent on the products of indian pharmaceutical companies from april 2. Although this tariff is more focused on ireland and China, indian companies can also be affected by it.
Which companies are most at risk?
According to brokerage firm Jefferies, generic drug companies and contract manufacturers (CMOs) are at the highest risk. In this, Zydus Lifesciences, whose 45 percent of total sales comes from the US, is at the highest risk. Let us tell you, the market share of its oral medicines in the US is very large. Apart from this, Dr. Reddy's Laboratories (43 percent sales from US), Gland Pharma (54 percent sales from US) and Biocon (50 percent sales from US) are also in the risk list. That is, the reciprocal tariff will have a direct impact on the profits of these pharma companies. Apart from this, companies like Lupin (35 percent sales from US), sun Pharma (30 percent sales from US) and Cipla (28 percent sales from US) will also be affected, but it will be slightly less than the companies mentioned above.
Will indian companies be able to bear the tariff?
According to The Mint report, if tariff is imposed, then companies will try to put the cost on American distributors or insurance companies. But there is more pricing pressure in the generic market, so the margin may be affected. Starting manufacturing in America is a long process of 5-6 years, which will cost a lot.
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