Aurobindo Pharma, Lupin & Other Pharma Shares Gain as US Considers Excluding Generic Drugs from Tariffs

Market Performance

Pharma shares witnessed notable gains on October 9, with Aurobindo Pharma, Lupin, and other leading companies rising up to 4% following news that the US administration is considering excluding generic drugs from tariffs. This development brought relief to Indian pharmaceutical firms and lifted the Nifty Pharma index by 0.9%.

• Aurobindo Pharma: +4%
• Lupin: +3.4%
• Dr Reddy's Labs: +2%
• Zydus Lifesciences: +1.4%

The move injected optimism into the sector, reversing recent concerns over potential trade restrictions and tariff impositions.

Main News

The Wall Street Journal reported that the US government is seriously considering excluding generic medicines from tariffs. While the decision is not yet final, internal discussions within the administration suggest a focus on alternative measures, including federal grants or loans, to support domestic production of essential generic drugs.

• The administration is working to lessen dependence on overseas suppliers, including those from India.
• Officials clarified that Section 232 tariffs on generic pharmaceuticals are not actively under consideration.
• A multi-faceted approach is being pursued to strengthen onshore manufacturing and ensure supply security, especially after the disruptions experienced during the Covid era.

Company Details

Lupin has gained attention not only due to the tariff update but also with plans to expand its US footprint.

• The company plans a new manufacturing facility in Coral Springs, Florida, with a projected $250 million investment over five years.
• This facility will focus on R&D, infrastructure, and capital expenditure.
• The site is designed to produce over 25 critical respiratory medicines.
• Lupin will benefit from tax credits and other incentives from Florida.

These steps signal a strategic move by Lupin to strengthen production capabilities in the US and mitigate potential geopolitical risks.

Summary

The Indian pharmaceutical sector showed strength today as major shares rose following encouraging US policy updates. Excluding generic drugs from tariffs could provide stability for Indian exporters while supporting domestic growth for companies like Aurobindo Pharma and Lupin.

• Pharma shares led gains in the Nifty Pharma index, reflecting broad sector optimism.
• Companies are actively enhancing their global operations, such as Lupin’s US manufacturing expansion.
• The sector appears resilient, even amidst potential tariff discussions, thanks to a strong focus on generic medicines and strategic investments abroad.

With regulatory clarity and expansion plans in motion, Indian pharma companies continue to maintain their global competitiveness while securing market confidence.