Pharma stocks rebound in 2026 as tariff fears ease

A rebound led by defensives

Pharmaceutical shares bounced back after a phase of tariff-led anxiety, with investors rotating into defensives even as broader market direction stayed mixed. The Nifty Pharma index outperformed on multiple sessions referenced in the updates, including days when other sectors were weaker. The move also coincided with strength in FMCG shares, another defensive pocket, as the market’s gaining streak extended to six days in one session. The Nifty FMCG index climbed as much as 1.7 percent, with Hindustan Unilever, ITC, Varun Beverages and Nestle India among the leaders. In pharma, the rebound was supported by headlines around a US tariff pause and reports suggesting generic drugs may be spared from fresh levies. Analysts quoted in the updates described the prior sell-off as largely sentiment-driven.

What changed on the US tariff narrative

A key trigger for the bounce was a report cited from The Wall Street Journal that the Donald Trump administration may not impose tariffs on generic drug imports. The report also said this reflected a scaling back of the Commerce Department’s tariff investigation into pharmaceuticals. Importantly, officials were said to have indicated the move was not final and could still change in the coming weeks. Even so, the shift in tone mattered because Indian exports to the US are heavily skewed to generic and off-patent formulations rather than branded and patented drugs. That distinction was repeatedly highlighted by analysts as a reason the sell-off had overshot fundamentals.

How stocks moved on the day of tariff-relief buzz

On Thursday, October 9, 2025, the Nifty Pharma index was up 1.13 percent around 10:05 AM, versus a 0.01 percent uptick in the Nifty50, and it touched a 1.5 percent intraday gain. Lupin rose as much as 4.1 percent intraday, Aurobindo Pharma 4.3 percent, Zydus Lifesciences 3 percent and Dr Reddy’s Laboratories 2.2 percent. Other widely held names including Piramal Pharma, Biocon, Divi’s Labs, Glenmark Pharma, Cipla, Sun Pharma and Ajanta Pharmaceuticals were also trading higher, typically in the 0.75 percent to 1.35 percent band at the time of the report. In other sessions referenced, pharma shares also rallied on a “tariff pause”, with individual counters such as Laurus Labs, Granules, and Cipla seeing sharp moves, including up to a 7 percent surge in select names. One update also noted broad-based gains pushing the Nifty Pharma index over 1 percent higher on a day it was the only sectoral gainer.

Why the US matters for Indian pharma exporters

The US remains India’s largest export destination for pharmaceuticals, and the updates provided a clear trail of the export trend. In FY25, nearly 35 percent of India’s total drug and pharmaceutical exports were to the United States, worth $10.52 billion. This compared with $1.73 billion in FY24 (about 31 percent), $1.55 billion in FY23, and $1.08 billion in FY22. Pharmexcil was cited as saying a large share of exports to the US are generic and off-patent products such as tablets, capsules, injectables, antibiotics, vitamins, anti-diabetics and cardiovascular medicines. The same update said India supplies nearly 47 percent of the generic medicines used in the US.

Company exposure: where the sensitivity is higher

While the sector benefits from positive tariff headlines, company-level exposure varies significantly. The updates cited FY25 revenue exposure to the US for several exporters. Gland Pharma derived 54 percent of total revenue from the US, Aurobindo Pharma 47 percent and Dr Reddy’s 45 percent. Sun Pharma, Lupin, Cipla and Zydus Lifesciences were also described as large suppliers of generic and off-patent drugs to the US with meaningful exposure. For investors, this matters because tariff outcomes and US pricing pressure tend to flow through unevenly across portfolios.

Budget 2026 adds a domestic policy tailwind

Separate from the tariff narrative, Union Budget 2026 announcements also supported pharma sentiment. The finance minister unveiled the BioPharma Shakti initiative with an outlay of ₹10,000 crore over five years to strengthen domestic manufacturing of biologics and biosimilars. The policy intent was framed around capacity creation, reducing import dependence and improving competitiveness in higher-value biopharma segments. The Budget also outlined plans to expand training and research infrastructure, including the establishment of three new National Institutes of Pharmaceutical Education and Research (NIPERs) and the upgradation of seven existing institutes. Following the Budget announcement, the Nifty Pharma index advanced, with Sun Pharma gaining up to 3.8 percent and Biocon up to 2.9 percent in one cited session.

A broader market backdrop: capex, defensives, and volatility

Reuters reported Indian benchmarks rising in a special trading session after the government reiterated support for growth through higher capital spending and targeted measures across manufacturing, pharmaceuticals and electronics. The government said it would spend a record 12.2 trillion rupees (₹12,20,000 crore) on infrastructure in the coming year. Around 11:41 a.m. IST in that session, the Nifty 50 was up 0.12 percent at 25,351.35 and the Sensex up 0.18 percent at 82,408.02. Even with that support, small-caps fell 1 percent and mid-caps were flat, underlining uneven risk appetite. Pharma rose 0.5 percent in that snapshot, led by Biocon after the five-year biopharma allocation was reiterated.

Valuation and flows: what capped the sector in 2025

The updates also provided context for why pharma struggled through 2025 despite intermittent rallies. The Nifty Pharma index ended 2025 in negative territory, down nearly 2 to 3 percent, amid persistent US pricing pressure, tariff uncertainty, weak earnings from index heavyweights and regulatory overhang. Foreign investor selling was another constraint: in the first half of January, foreign investors sold ₹2,075 crore in IT and ₹1,049 crore in healthcare shares, after outflows of ₹74,698 crore and ₹24,967 crore from the two sectors, respectively, in 2025. Valuation commentary suggested the sector had traded near 40 times earnings at the 2024 market peak despite 6 to 8 percent dollar growth, and even after correction was cited as trading around 30 times earnings.

Company-specific datapoints investors tracked

Beyond index moves, several stock-specific updates shaped sentiment. Marksans Pharma reported Q2 FY26 revenue of ₹720.4 crore (₹7,204 million), up from ₹641.9 crore (₹6,419 million) year-on-year, while net profit rose to ₹99.1 crore (₹991 million) from ₹97.8 crore (₹978 million). The company cited good growth in the US region with stabilising tariff conditions, and stable UK results despite pricing pressure. It also stated a revenue target of ₹3,000 crore (₹30 billion) over the next two years. Separately, Piramal Pharma shares slipped from ₹173.3 to ₹168.6 over five trading sessions, with a 52-week high of ₹273.20 on December 31, 2024 and a 52-week low of ₹167.85 on December 16, 2025.

Key numbers at a glance

Exposure snapshot from the updates

What the rebound signals, and what remains unresolved

The set of updates points to two clear drivers behind the pharma rebound: easing headline risk on US tariffs for generics, and domestic policy support via Budget 2026’s biopharma manufacturing push. At the same time, the reporting also underlined constraints investors continued to watch, including US pricing pressure, valuation multiples that remain elevated relative to growth, and persistent foreign selling in healthcare. Near-term price action was also described as sentiment-sensitive, with caution expressed that some rebounds after sharp corrections may not yet qualify as durable uptrends. The next directional cues, based on the updates, are likely to come from clarity on US tariff decisions and how quickly policy measures translate into capacity creation and execution on the ground.