Jefferies said media reports suggest the Trump administration is preparing to impose tariffs of up to 100% on certain medicines, with the announcement expected as soon as today, under a Section 232 investigation–led move that would target companies which have not struck a deal with the White House, while capping imposts on countries that have negotiated trade agreements.
The White House is yet to issue an official release and “plans aren’t yet final and could still change”, with potential exemptions for “certain medicines/ disease categories”, the brokerage noted.
“Our base case remains that generics would remain exempted from any tariffs in the US,” Jefferies wrote, arguing that imposing duties on off‑patent drugs, which operate at “thin gross margins”, risks higher prices through potential drug shortages arising from supply‑chain disruptions.
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Against this backdrop, the brokerage flagged Sun Pharma as “the most exposed Indian company to tariffs” because of its sizeable specialty and innovative portfolio.
Innovative products account for about 20% of Sun Pharma’s overall revenue, and Jefferies’ analysis shows that its key innovative brands for the US market are manufactured in South Korea, the European Union and within the US itself.“As per our analysis, the key innovative products of Sun Pharma are manufactured in South Korea, EU or within the US,” the report said, adding that South Korea and the EU have negotiated pharma tariffs at 15% with the US. “We therefore believe the max tariffs on Sun Pharma’s innovative products would be capped at 15%,” Jefferies estimated.
The firm’s product‑wise breakdown underscores the overseas skew in Sun’s US portfolio. According to Jefferies, Sun’s US sales are driven by products such as Tildrakizumab (Ilumya), which accounts for 22% of its US sales and is manufactured in Germany and South Korea, and cyclosporine eye drug Cequa, contributing 9%, made in France and the Czech Republic. Other key brands include Winlevi (clascoterone), produced in Italy and Spain and making up 6% of US sales, and several US‑made or India‑made generics like lisdexamfetamine, albuterol‑ipratropium, isotretinoin and lenalidomide, among others, with the listed products together representing 75% of Sun’s US sales by IQVIA data, the report showed.
While the spotlight is on tariff risk, Jefferies continues to value Sun Pharma at a premium to other large‑cap Indian peers, assigning a 32 times March 2028 price‑earnings multiple and maintaining its ‘Buy’ rating on the stock.
Key downside risks, it cautioned, include “inability to ramp up specialty products in the US and developed markets, raw material price inflation, and slow India pharma industry growth”, factors that would be compounded if tariff pressures on innovative products materialise more severely than its base case.