US Tariff Risks for Indian Pharma – Kotak Securities Note

Kotak Institutional Equities warns that a proposed 25% US tariff on Indian imports could hit Indian pharma companies’ EPS by up to 27%, assuming zero cost pass-through. Uncertainty remains over whether pharmaceuticals are included in the new tariffs, especially amid conflicting signals from the US-EU trade deal. Generics firms like Cipla may mitigate risks through their US manufacturing presence and flexible supply chains. However, companies such as Biocon and Aurobindo Pharma face significant EPS pressure due to reliance on Indian production and limited pricing power in biosimilars. Sun Pharma’s specialty portfolio may struggle to pass on costs despite high prices, though product uniqueness offers some protection. CRDMOs might partially shift tariffs to clients, but this remains uncertain. The long-term outlook suggests reduced US outsourcing if domestic API manufacturing grows. Companies with diversified portfolios and strong domestic operations are better positioned to weather the storm.