The US administration’s phased tariff plan on imported generic medicines is not expected to significantly affect Indian pharmaceutical companies’ credit profiles in the next two financial years. According to Infomerics Ratings, the US imported pharmaceutical products worth $9.47 billion from India in FY26, constituting about 30% of India’s overall pharma exports.
Indian pharmaceutical firms have a built-in transition period to adjust their business strategies, which will help mitigate the immediate impact on their financial and credit standings. Rohit Inamdar, Chief Ratings Officer at Infomerics Ratings, highlighted challenges in shifting manufacturing to the US due to supply chain complexities, regulatory hurdles, and cost considerations.
The report emphasized that key materials for pharmaceuticals are mainly produced in India and China, making it challenging to replicate supply chains in the US. Currently, Indian companies supply nearly half of all generic prescriptions in the US, accounting for 90% of prescriptions filled but only 13% of total prescription drug spending.
Despite healthy EBITDA margins of 26.1% in FY26 for leading listed pharmaceutical companies, revenue growth was around 11% with stable debt protection metrics. Indian pharma firms have diversified revenue sources across domestic markets, Europe, and emerging markets like South Africa, Mexico, Brazil, and Russia, reducing reliance on the US market.
While the US market share for top companies decreased to 33.4% in FY26, those with higher exposure to the US market may face more significant pressure. Companies like Sun Pharma, Dr. Reddy’s Laboratories, Aurobindo Pharma, Zydus LifeSciences, and Lupin, which generate 35-50% of their revenues from the US, could experience heightened challenges.
Under the new tariff plan, generic medicine imports into the US will remain tariff-free until July 31, 2028. Subsequently, tariffs will increase to 100% for a year starting August 1, 2028, and then rise to 200% from August 1, 2029, unless manufacturers establish production facilities in the US.
