3 Indian Pharma Stocks to Watch as Trump Pushes for Drastic Drug Price Cuts

Recently, Indian pharma companies have come under pressure.

On 26 August, shares of major drugmakers fell after US President Donald Trump vowed to slash drug prices in the US by an exaggerated "1,400-1,500%" and reiterated his threat of imposing higher tariffs on pharma imports.

The US is the largest export market for Indian pharmaceutical firms, particularly in generics, accounting for a significant share of their revenues. A steep reduction in drug prices would lower realisations from exports, squeezing margins.

On top of that, potential tariffs on imported medicines could further dent competitiveness against US-based producers.

This aggressive stance on drug pricing raised fears of stricter regulations and margin pressure for Indian exporters.

This uncertainty triggered a sell-off in pharma stocks, as investors anticipated weaker earnings growth and higher risks in the biggest market.

Here are the stocks most likely to feel the impact.

#1 Zydus Lifesciences

First on the list is Zydus Lifesciences.

Zydus Life is one of India's leading pharmaceutical companies. It holds leading positions in cardio-diabetology, respiratory, gynaecology, oncology, nephrology, and hepatology. These collectively account for nearly half of the domestic formulation revenues.

The company has built a significant presence in the US market, which has become its single-largest growth driver.

After crossing the US$ 1 billion (bn) revenue milestone in FY24, Zydus sustained momentum in FY25 with double-digit growth despite the high base. The US remains Zydus' most important market, contributing nearly half (49%) of its consolidated revenues last year.

In this market, the company has built a strong presence with a portfolio of over 225 generic products. It holds leadership positions in about a quarter of these product categories and ranks among the top three players in more than half.

This strong foothold makes Zydus the fifth-largest generic drugmaker in the US by prescriptions.

This heavy dependence on the US market makes Zydus particularly vulnerable to any regulatory or pricing shocks. If drug prices in the US are forced downward or if tariffs are imposed on imported medicines, Zydus could face meaningful margin pressure.

Going forward, the company is building its presence in the liquid oral space through the LiqMeds portfolio. Liquid orals is a large, growing market and serves an unmet healthcare need. It offers greater convenience and ensures better therapy compliance for geriatric and paediatric patients.

For more details, see the ZYDUS LIFESCIENCES company fact sheet and quarterly results.

#2 Sun Pharma

Next on the list is Sun Pharma.

Sun Pharma is the largest domestic pharma company, with a leading position in the high-growth chronic segment. It has 28 brands ranked among the top 300 brands in the domestic market.

The company also has a significant presence in Active Pharmaceutical Ingredients (APIs), with a portfolio of over 400 APIs covering several therapeutic areas, including oncology, peptides, steroids, hormones, and controlled substances.

It also ranks among India's top 10 consumer healthcare companies and enjoys strong brand equity for key products such as Revital and Volini.

The company holds the 12^th position among the world's largest generic pharma companies in the US.

In the US market, it reported a 5.8% YoY rise in revenue in FY25 to Rs 162 bn, which contributed nearly 31% of its consolidated revenues.

The growth was primarily led by the speciality portfolio, where several products continue to gain sustained traction.

However, the generics segment in the US remained under pressure, impacted by compliance-related challenges at manufacturing facilities and rising competition across key products.

Looking ahead, the ongoing price cuts in the generics space are expected to intensify the pressure on this segment. While the company's speciality business is likely to provide some support to overall performance, the pricing erosion could limit revenue growth and compress margins.

The company anticipates mid to high single-digit consolidated topline growth in FY26, with its global speciality business expected to remain on a strong growth trajectory.

Research and development expenditure for FY26 is projected to be in the range of 6-8% of sales, with a higher allocation directed towards speciality products.

For more details, see the SUN PHARMA company fact sheet and quarterly results.

#3 Dr Reddy's Laboratories

Last on the list is Dr Reddy's Laboratories.

Dr Reddy's Lab is one of India's largest pharmaceutical firms. Its products and services are spread across its core businesses of active pharmaceutical ingredients (APIs), generics, branded generics, biosimilars and over-the-counter (OTC) pharmaceutical products.

It works in the areas of gastrointestinal, cardiovascular, diabetology, oncology, pain management, and dermatology. Its segments consist of Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Others.

It has cGMP manufacturing facilities in the UK, Mexico, the US, and India, enabling it to serve a global clientele. Despite this global footprint, a large chunk of Dr Reddy's revenue still comes from the US.

In FY25, North America remained its largest market, contributing nearly 50% of the company's generics sales and 45% of overall revenue.

The region generated Rs 145.2 bn, a 12% YoY growth. This performance was driven by higher volumes in the base business, including products such as lenalidomide, although the gains were partially offset by pricing pressure.

Given its heavy dependence on the US market, Dr Reddy's remains highly vulnerable to price erosion in the generics space.

The US healthcare system is known for its aggressive price cuts and consolidation of buying groups, which put downward pressure on generic drug prices.

Any intensification of these pricing challenges could weigh on Dr Reddy's margins and restrict revenue growth despite volume gains.

For more details, see the Dr Reddy's Lab company fact sheet and quarterly results.

Conclusion

Pharmaceutical spending in the US is projected to witness steady growth through 2028, with invoice-level spending expected to rise by nearly US$ 299 bn during this period.

The bulk of this growth is likely to come from higher usage of existing protected branded products, contributing an estimated US$ 322 bn in additional spending.

Alongside this, a strong pipeline of innovation is anticipated, with more than 250 new active substances set to launch, collectively adding around US$ 119 bn to overall spending.

Significant advances are expected in key therapeutic areas such as oncology, immunology, diabetes, and obesity, driven by a robust wave of next-generation biotherapeutics.

This momentum is poised to further support companies generating revenues from the US, enabling them to strengthen their growth rates and capture new opportunities.

To make informed decisions, it's crucial to assess the company's fundamentals, including its financial performance, corporate governance practices, and growth prospects.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...