Trump Tariff: HSBC estimates how much impact Sun Pharma will have

News Topical, Digital Desk : India's largest pharmaceutical company, Sun Pharma, is under the scrutiny of the market and its investors. The Trump administration is planning to impose a 100% tariff on branded and patented drugs in the US, effective October 1, 2025. Following this announcement, the Indian stock market and the pharmaceutical sector have seen a sharp decline. Sun Pharma is under scrutiny because its sales in the US patented product market constitute a significant portion of its total sales. However, HSBC believes that the impact on Sun Pharma's earnings will be limited.

What HSBC said:

In a Moneycontrol report, Damayanti Kerai, India Healthcare Analyst at HSBC, said that among Indian companies, Sun Pharma is the only one whose sales from patented products in the US could be considered significant. The company recorded global sales of $1.2 billion from patented products in FY25, of which approximately $1.1 billion came from the US – representing 17% of total revenue and approximately 8–10% of consolidated EPS. Kerai said, “While this tariff is negative for Sun Pharma, the impact on earnings will depend on several factors, including the supply chain structure, brand IP location, and the use of third-party manufacturers. This will limit the impact of tariff regulations to supply chain factors.” Sun Pharma's patent portfolio, which includes the psoriasis drug Ilumya, is primarily manufactured outside the US by global CDMO partners. The drug substance for Ilumya is manufactured in South Korea, while the final dose is produced in Europe. What is HSBC's opinion? HSBC has suggested several solutions to address the tariffs, such as shifting production to US-based CDMO plants, utilizing its three US manufacturing units, or acquiring a new plant. The company has over $3 billion in cash until June 2025, making this move possible. However, HSBC cautioned that “supply chain transformation, tech transfer, and plant retooling will take significant time.” This could take 6 to 24 months. In its base case scenario, HSBC estimates that if these solutions are delayed or are not effective, FY26–27 earnings could decline by 8–10%. Nevertheless, the brokerage remains positive. Kerai said there is no change in the buy recommendation for the stock with a target of 1850. 
 

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