Trump declares 100 pc tariff on branded drugs from Oct 1; Indian pharma may be hit
The latest move targets branded and patented medicines but creates uncertainty for India's $8.7 billion generic drug exports to the US market
US President Donald Trump on Thursday (September 25) announced that America will impose up to 100 per cent tariffs on imports of branded and patented pharmaceutical drugs from October 1, 2025.
In 2024, America imported nearly USD 233 billion in pharmaceutical and medicinal products, according to the Census Bureau.
Conditions for exemption
Trump’s announcement stated that the tariff will not apply to pharmaceutical products if a company is building a manufacturing plant in the US.
“Starting October 1st, 2025, we will be imposing a 100 per cent tariff on branded and patented Pharmaceutical Product, unless a company IS BUILDING their Pharmaceutical Manufacturing Plant in America,” Trump posted on his social media site Truth Social.
He clarified, “IS BUILDING will be defined as, ‘breaking ground’ and / or under construction”.
“There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started. Thank you for your attention to this matter,” he wrote.
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Impact on Indian pharma
There could be a significant impact of Trump's orders on the Indian pharma industry, with India being the largest exporter of generic medicines to the US.
India exported almost $8.73 billion worth of drugs to the US in 2024, according to the Pharmaceuticals Export Promotion Council of India. This constituted 31 per cent of India’s total pharma exports in 2024 of $27.9 billion.
Indian pharmaceutical companies like Sun Pharma, Gland Pharma, Dr Reddy’s, Aurobindo Pharma, Lupin, and Zydus Lifesciences are likely to be impacted since they earn between 30–50 per cent of their total revenues through exports to the US.
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Dominance of generic drugs in US
According to reports, more than 45 per cent of generic drugs and 15 per cent of biosimilar drugs used in America are supplied by Indian firms. Generics dominate the US prescription market, and almost four out of every 10 prescriptions in the US are for drugs manufactured by Indian companies.
Estimates by the analytics firm IQVIA show that generic drugs exported by Indian pharmaceutical companies saved the US healthcare system $219 billion in 2022 and $1.3 trillion between 2013 and 2022.
Higher tariffs would lead to an increase in drug prices for the American consumer since Indian companies operate on low margins and would find it difficult to absorb the additional costs. It would also lead to higher inflation and probable drug shortages in the US.
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Uncertainties remain
Trump specified “branded and patented pharmaceutical drugs” in his post on Truth Social.
This is a segment dominated by huge multinational pharmaceutical firms.
It is unclear whether complex generics and specialty medicines exported from India would be affected by the 100 per cent tariff threat.