Sun Pharma Halts US Expansion Amid 25 Percent Tariff Threat Net Profit Drops 20 Percent

Sun Pharmaceutical has announced it will not expand its US manufacturing footprint, citing concerns over potential reciprocal tariffs following Washington’s announcement of a 25% duty on Indian imports from August 1. CEO Richard Ashcroft confirmed there are currently no plans to increase US production, noting the existing facilities are sufficient for the company’s needs.

Chairman Dilip Shanghvi stated that, so far, pharmaceuticals remain exempt from the new tariffs pending the results of an ongoing Section 232 investigation under the US Trade Expansion Act. He added, “Till that time, I think pharma will continue to be exempt from basic tariff.”

Sun Pharma reported a 20% decline in April-June consolidated net profit, down to Rs 2,278 crore, mainly due to an exceptional charge of Rs 818 crore. However, operational revenue rose by 10% to Rs 13,786 crore, driven by volume gains and new product launches. First quarter EBITDA increased 19.2% to Rs 4,302 crore, with a margin of 31.1% due to improved raw material cost structure and a stronger branded product mix.

US formulation sales contributed over $473 million, accounting for 29.3% of total sales, while Indian formulation revenue reached Rs 4,721 crore (34.2% of sales). The company’s recent US launch of Leqselvi, an anti-baldness drug, and plans to be an early entrant in India’s GLP1 weight-loss market, underscore its innovation push despite global trade headwinds.

Industry experts note that while drug formulations and APIs are currently excluded from new tariffs, the final outcome remains uncertain. Sun Pharma’s decision reflects the sector’s cautious approach amidst volatile trade policies.