Macquarie has identified Aurobindo Pharma as the most vulnerable to Trump's proposed pharmaceutical tariffs, with the company having the highest exposure among its coverage universe. According to The Financial Express, Indian pharmaceutical companies account for more than 45% of generic medicine volumes sold in the US, and within this coverage, Aurobindo derives the largest share of revenue from the US market. Macquarie maintained its 'Underperform' rating on Aurobindo Pharma with a target price of ₹1,300, implying an 18% downside from the reference price of ₹1,580. In contrast, Torrent Pharmaceuticals emerged as the least exposed, with the brokerage retaining its 'Outperform' rating and target price of ₹5,000, indicating only a 1% downside from the reference price of ₹5,039. Sun Pharma occupies a different position due to its diversified US portfolio including branded products like Ilumya, Cequa and Winlevi, with Macquarie maintaining its 'Outperform' rating and target price of ₹2,150.
Macquarie believes the tariff proposal faces significant practical challenges that make rapid implementation unlikely. As reported by The Financial Express, the brokerage argues that relocating pharmaceutical manufacturing cannot happen quickly, with establishing manufacturing facilities typically requiring one to two years and securing US Food and Drug Administration approvals taking about one year. The report points to the six-year grandfathering period under the US Biosecure Act as evidence that policymakers themselves recognize the time required to rebuild pharmaceutical supply chains. Macquarie warns that many Indian generic manufacturers have already indicated that their US operations generate limited profitability, and additional tariffs could push several companies out of the market, potentially worsening shortages of generic medicines across the US healthcare system.
US President Donald Trump announced on Wednesday that imported generic pharmaceutical drugs will face 0% tariffs for the next two years from August 1, 2026, providing a temporary reprieve for global suppliers. However, the announcement also warns that imports could face tariffs starting at 100% and eventually rising to 200% if drugmakers continue manufacturing overseas rather than shifting production to the US. According to reports from NDTV Profit, this development has put Indian drugmakers with major exposure to the US market, including Sun Pharma, Lupin, Dr. Reddy's Laboratories, Aurobindo Pharma, Cipla, Glenmark Pharmaceuticals, and Torrent Pharmaceuticals, in focus. The proposal is part of Trump's broader push to revive domestic manufacturing and reduce America's dependence on imported pharmaceuticals.
Macquarie believes the market reaction to the proposed US tariffs should be viewed through the lens of company-specific exposure rather than broad sector concerns. According to The Financial Express, the brokerage maintains that the proposal remains impractical because relocating pharmaceutical manufacturing to the US would take years and could worsen medicine shortages instead of strengthening domestic production. Despite the uncertainty, Manchanda expects most pharmaceutical companies to report only low-single-digit growth in the near term. In the short term, there is little immediate disruption because generic medicines remain tariff-free for two years, but in the medium term, Indian pharmaceutical companies are likely to reassess their manufacturing strategies, with some accelerating investments in US production facilities. However, in the long term, if tariffs as high as 200% are eventually implemented, India's pharmaceutical industry could face one of its biggest challenges in decades in its largest export market.
Experts quoted by CNN warn that moving pharmaceutical manufacturing is far more complex than relocating production in sectors like electronics or apparel because it requires regulatory approvals, inspections and new supply chains. Several leading Indian pharmaceutical companies derive a substantial portion of their revenue from the US market, with companies like Sun Pharma, Dr. Reddy's Laboratories, Aurobindo Pharma, Lupin, Zydus Lifesciences, Cipla, Glenmark Pharmaceuticals, and Torrent Pharmaceuticals having significant exposure. While companies that already own manufacturing facilities in the US or have diversified production across multiple countries may be better positioned, firms that primarily export medicines manufactured in India face greater challenges. Expanding production significantly would require fresh investments running into hundreds of millions of dollars, hiring skilled workers, meeting stringent US FDA approvals, and building new supply chains.
