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Indian pharmaceutical industry has begun to get unsettled following US President Trump’s proposed tariffs of up to 100% on imported generic drugs beginning in 2028 and increasing to 200% after one year.
As the Pharmacy of the World, the industry said that every third prescription in the US is a generic medicine from India. Also, India accounts for the highest number of US FDA-approved manufacturing plants, which is around 750, outside the United States. Therefore, any sharp rise in tariffs could impact Indian drug exporters, increase costs for US patients, and disrupt the supply chain of affordable medicines.
The reason behind the increase in tariffs proposed by US President Donald Trump is aimed at encouraging domestic manufacturing in the US. The policy is intended to incentivise companies to shift production back to American soil, reduce dependence on imported medicines, and strengthen the country’s pharmaceutical supply chain. "This is done in order to RESHORE Generic Pharmaceutical Production into America," the President Trump wrote on Truth Social.
Several US pharma majors, including Johnson & Johnson, Pfizer, Merck, Eli Lilly and AbbVie have a strong footprint in India through wholly owned subsidiaries and joint ventures. Their operations span the commercialization of advanced therapies, clinical research, and the use of Global Capability Centres (GCCs) to support artificial intelligence-driven initiatives and R&D efforts.
Facing the US’s tariff uncertainty, Indian pharmaceutical companies are now closely monitoring the proposal of 100 per cent levy going up to 200 per cent. While the plan is intended to encourage manufacturers to shift production to the US, industry experts expressed that they doubt whether tariffs alone will be enough to persuade generic pharma companies to move production to the US. They sight significant challenges, including higher manufacturing costs and complex supply chains which could limit the feasibility of relocating generic drug production.
Harish K Jain, president, Federation of Pharmaceutical Entrepreneurs (FOPE) and director Embiotic Labs said that the proposed US tariffs on generic medicines are a matter of concern not only for Indian pharmaceutical manufacturers but also for patients who depend on affordable, high-quality medicines.
Our pharmaceutical companies have been trusted partners in ensuring reliable and cost-effective drug supplies to the US healthcare system. We hope both governments will engage constructively to arrive at a balanced solution that safeguards patient access, strengthens resilient supply chains, and promotes fair trade. FOPE remains committed to supporting quality, compliance, and global healthcare partnerships, Jain told Pharmabiz.
Thomas V. Abraham, Research Analyst, Mirae Asset Sharekhan, said that while we need to wait for further clarity, yet my quick sense is that the manufacture being referred to is not all the drugs but having manufacturing units in the US just like how the earlier policy was for branded drugs.
Most companies have some units organically or inorganically and the two years provide enough time to meet the rules. Additionally, in the last such move, branded drug companies subsequently entered into deals with the government to circumvent the impact of tax and the same can be sought by generic companies too. However, will wait to see how market responds to this new tariff. Investors could turn risk averse in the near-term as they await clarity, said Abraham.
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