The tariff, which excludes companies building manufacturing plants in the US, will not apply to generic medicines. For Sun Pharma, patented drugs accounted for about 17% of its revenue in FY25, translating to roughly $1,217 million of consolidated sales.
Of this, around 85–90% — nearly $1.1 billion — came from the US market. HSBC estimates that, in a worst-case scenario, the tariff could shave 8–10% off Sun Pharma’s earnings in FY26 and FY27. Despite the potential risk, the brokerage has maintained its ‘Buy’ rating on the stock with a target price of Rs 1,850, implying about 17% upside from the last close of Rs 1,627 on the NSE.
While the new trade measure is expected to have minimal impact on Indian pharma companies focused on generics, Sun Pharma’s growing dependence on its patented portfolio — expected to rise from 17% of revenue in FY25 to about 22% by FY28 — makes it vulnerable.
The company’s innovative portfolio, led by Ilumya, Cequa, Winlevi, and Leqselvi, is a key growth driver. Sales of patented products in the US grew at a compound annual rate of 19.2% between FY25 and FY28, according to HSBC.
Sun Pharma currently relies heavily on global contract development and manufacturing organisations (CDMOs) to produce its patented medicines. Ilumya, which accounts for 56% of its patented sales, is manufactured in South Korea and Europe. To sidestep the tariff, the company could shift production to CDMOs with US facilities, move manufacturing to its three existing US plants, or acquire a local facility. With a cash balance of over $3 billion as of June 2025, Sun has the financial flexibility to implement such measures. However, HSBC cautions that relocating production or repurposing plants could take 6–24 months and involve substantial costs.Despite the tariff risk, HSBC expects Sun Pharma’s revenue to continue growing steadily, with its innovative medicines portfolio playing a crucial role.
While the tariff is a headline risk, its earnings impact may be contained depending on the company’s mitigation steps, the brokerage said. Generic drugs, which make up about 90% of prescription volumes in the US, remain exempt from the tariffs for now. HSBC believes the risk of similar duties on generics is low, given their importance to US healthcare costs and the dominance of Indian suppliers.
Sun Pharma shares ended at Rs 1,585, lower by 2.6% from the last close on the NSE. The company’s shares are down 16% on a year-to-date basis.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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