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The Indian pharmaceutical industry will have to maximise its strength in API (active pharmaceutical ingredient) manufacturing and capitalize on favourable trade exemptions. The strategic approach will not only bolster India's position in the global pharmaceutical market but also contribute to the resilience and sustainability of global healthcare supply chains.
Shashank Silhare, engagement partner, Practus pointed out that Chinese exports to USA are subjected to average 124.1% tariffs post series of tariff impositions, retaliation and counter retaliation by both countries between February and April, 2025. US imports 75% of its essential medicines. Although pharmaceuticals have so far been exempted from Trump’s reciprocal tariff, it remains uncertain how long that will continue, particularly with potential sector-specific levies on the horizon. Pharmaceutical products have long been spared from trade wars due to the potential harms, but Trump has repeatedly threatened a 25% tariff on pharmaceutical imports.
US pharmaceutical imports have risen sharply in the last decade, with significant imports from China and India. India supplies about half of all generic drugs by volume used in the US. China plays a pivotal role in supplying essential generic drugs such as Ibuprofen, hydrocortisone, acetaminophen, and penicillin etc. to the US market. Similarly, a significant part of raw ingredient required for drug manufacturing in the US are sourced from China. The US government’s focus on reducing dependency on foreign pharmaceutical sources has led to discussions about bolstering domestic production. However, establishing new compliant pharmaceutical manufacturing facilities in the US could take 5–10 years, he added.
If the US tariffs primarily target Chinese pharmaceutical products especially APIs and generics, Indian companies could gain short-term advantages. Indian exporters like Sun Pharma, Dr. Reddy’s, Cipla, and Lupin could see a boost in orders as US buyers diversify away from China. The US heavily depends on low-cost generics, a segment where Indian companies are strong. Tariffs could accelerate generic drug contracts for Indian firms, Shashank Silhare told Pharmabiz in an email.
Now US depends on China for 10% of its pharmaceutical API requirements in value. India is a major supplier of APIs to the US, contributing 18% of the source. India with its robust and cost-effective API manufacturing ecosystem, is well-positioned to absorb a large portion of this redirected demand. US tariffs could speed up India’s internal API ecosystem, making India more self-reliant over 3–5 years, he noted.
India imports 70% of APIs by value from China. US tariffs on Chinese imports might lead to dumping of APIs in Indian market which may erode profit margins of Indian pharma API players. India is also expected to face competitive pressures from countries such as Vietnam, Bangladesh and Mexico who have emerged as alternative manufacturing hubs for pharmaceuticals and been hit by US tariffs. Indian pharma needs to stay competitive on pricing and regulatory compliance to fully capitalize on US market shifts, Shashank stated.
As Indian pharma increases exports, US FDA scrutiny will rise. Companies with strong compliance records like Sun Pharma among others will benefit, while those with a history of warning letters could struggle, he pointed out.
US tariffs on pharma imports, especially from China present a mixed but overall positive opportunity for India’s pharmaceutical industry. Indian firms that manage supply chain risks, maintain regulatory standards, and offer competitive pricing could emerge as major winners in the evolving global pharma supply chain, said Shashank.
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