Trump’s Tariff Hike Won’t Impact India’s Pharma Sector Due To Generic Drugs Exemption

New Delhi: India’s pharmaceutical sector, which mainly exports cheaper generic drugs to the US market, is not expected to be significantly affected by President Donald Trump’s imposition of 100 per cent import tariffs on branded or patented pharmaceutical drugs from October 1.

The hike in US tariffs mainly targets branded and patented drugs, exported by multinational pharma giants such as Pfizer and Novo Nordisk. The increase in the import tariff comes in the backdrop of Trump’s severe criticism of big pharma companies for the high prices they are charging in the US market.

Indian generic drugs, on the other hand, are cheaper substitutes for these branded drugs in treating diseases ranging from cancer to diabetes and help to keep the cost of medicines within the affordable range for US consumers. Around 40 per cent of the generic drugs sold in the US market are imported from India.

Indian companies ship about $20 billion worth of generic medicines to the US every year, with Sun Pharma, Dr Reddy’s Laboratories, Cipla, Lupin, and Aurobindo Pharma among the major exporters. The US market accounts for around a third of India’s pharmaceutical exports.

Pharmaceuticals Export Promotion Council of India Chairman, Namit Joshi said Trump’s decision will not have much of an impact on the Indian pharma industry as it exempts generic exports.

Although there is some supply of branded drugs by some Indian companies, they have also set up manufacturing facilities in the US, which will exempt them from the 100 per cent tariff.

Major Indian companies such as Cipla Ltd., Dr Reddy’s Laboratories, and Lupin already have manufacturing facilities in the US. Similarly, Bengaluru-based Biocon, through its wholly owned subsidiary Biocon Generics Inc., has also commissioned its US manufacturing facility earlier this month in Cranbury, New Jersey. Hence, Biocon is also likely to face no impact from the 100 per cent tariff.

“Starting October 1, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump declared on his social media platform.

He said “IS BUILDING” would mean “breaking ground” or “under construction,” adding that products from firms already investing in US facilities would not face tariffs.

According to an Indian government report, India’s pharmaceutical industry is a global powerhouse, ranking third in the world by volume and 14th in terms of production value. It supplies over 50 per cent of global vaccine demand and nearly 40 per cent of generics to the US. The industry is projected to grow to $130 billion by 2030 and $450 billion by 2047.

Backed by policy support for pharmaceuticals, such as the PLI scheme, for which an outlay of Rs 15,000 crore has been earmarked, and the Strengthening of Pharmaceuticals Industry scheme, the industry continues to expand its global footprint.

Beyond cost efficiency, India has emerged as a hub for affordable, high-quality medicines, reinforcing its rightful title as the “Pharmacy of the World,” the report states.

(IANS)