Analysts have stated that Indian pharmaceutical companies supplying medicines to the US market are likely to experience minimal impact from US President Donald Trump’s plan to impose tariffs on generic drugs starting in 2028. Many Indian firms have subsidiaries in the US, and there is a significant price difference between how products are transferred to and sold in the US market, with the tariff expected to be based on the entry price into the US market.
Moreover, it is highlighted that 90% of generic prescriptions in the US are imported, which would lead to a general increase in tariffs for all suppliers to the US market, not just limited to India. Tushar Manudhane, SVP, Institutional Research Analyst–Healthcare at Motilal Oswal Financial Services Ltd, emphasized that the cost advantage of manufacturing in India, which is 40-60% lower than in the US, would still prevail even with the tariff implementation.
Furthermore, the process of setting up a manufacturing plant in the US, which takes a minimum of two years, would also require plant inspections and product approval cycles of 12-15 months, delaying potential competition. This scenario questions the economic feasibility of establishing manufacturing plants in the US for generics, ultimately resulting in minimal impact on Indian pharma companies supplying medicines to the US market.
India is recognized as the “pharmacy of the world” for its global supply of generic medicines, with Indian generics constituting nearly 40% of the volume in the US market. In the financial year 2024-2025, India exported pharmaceuticals worth $9.7 billion to the US, representing 38% of its total global pharmaceutical exports of $25.8 billion, as per data from the Global Trade Research Initiative.
Trump’s announcement specifies that imported generic medicines will be tariff-free for two years starting August 1, 2026, before facing tariffs of 100% and later 200%, aiming to encourage pharmaceutical production relocation to the US. This move provides foreign generic drug manufacturers a two-year grace period to establish production facilities in the US or encounter substantial tariffs on medicines shipped to the American market.
