Trump's 100% Drug Tariff: India's Generic Edge Limits Immediate Fallout

 **Trump's 100% Drug Tariff: India's Generic Edge Limits Immediate Fallout**

The recent announcement of a 100% tariff on branded and patented pharmaceutical products by US President Donald Trump has sent ripples through the global pharmaceutical market. However, India's vast capabilities in generic drug production and its cost efficiency provide a significant buffer against the immediate impacts of this decision.

India, known for its robust generic drug manufacturing sector, may mitigate some consequences of the tariff, allowing it to continue supplying essential medications at lower costs. Despite this advantage, Indian pharmaceutical stocks experienced a decline following the tariff announcement, reflecting investor concerns about potential long-term effects on the industry.

Two government officials said New Delhi is examining the impact of Trump’s decision on generic drugs exported by India to the US.

“We [India’s pharmaceutical industry] are largely into generic drug exports. Given their price competitiveness, we will continue to export to the US regularly, as [the generic drugs] are still expected to remain outside the scope of the new reciprocal tariff regime,” one of them said.

“We are examining the proposal and plan to discuss its impact with the export promotion councils. At this initial stage, we do not foresee any major impact on Indian drug exports," the second official said. Both of them requested anonymity.

Industry leaders also said the overall impact of Trump’s latest tariff would be limited.

“We don’t see any direct impact of Trump’s 100% tariff proposal… because India is not into the patented products market,” said Viranchi Shah, national spokesperson of the Indian Drugs Manufacturers Association. “However, we are awaiting more details in the form of some order.”

The Nifty Pharma index was down nearly 2% around noon on Friday. Sun Pharmaceutical Industries Ltd was down 2.89% at ₹1,580.30 per share, while Dr Reddy's Laboratories Ltd was trading about 1% lower at ₹1,261.60, and Lupin Ltd was down 1.78% at ₹1,928.60.

According to Trump’s proposal, the new tariff would apply unless a pharma company has its manufacturing plant in America. As the situation develops, the ability of Indian generics to maintain market stability will be closely watched by both investors and health professionals alike.

“The proposed 100% tariff on branded and patented pharmaceutical imports is unlikely to have an immediate impact on Indian exports as the bulk of our contribution lies in simple generics and most large Indian companies already operate US manufacturing or repackaging units and are exploring further acquisitions,” said Namit Joshi, chairman of Pharmexcil (Pharmaceuticals Export Promotion Council of India).

“Nonetheless, it is prudent to remain prepared for future policy shifts and to build risk-mitigation strategies,” he added.

The commerce ministry didn’t immediately reply to Mint’s queries.

‘A troubling sign’

India’s total export of drugs and pharmaceuticals increased to $30.38 billion in 2024-25 from $27.82 billion in FY24. Exports to the US rose to $10.52 billion from $8.73 billion in FY24, accounting for about 34.6% of India’s total drug exports in FY25.

As per a recent report by the Global Technology Research Institute, although the US hadn’t imposed reciprocal tariffs on pharmaceuticals earlier, India’s pharma exports recently had dropped to $646.6 million in August from $745 million in May.

Patented drugs are new, unique medicines developed by a company and are often very expensive. Generic drugs, on the other hand, are low-cost versions of these medicines that can be produced once the original patent has expired.

Generic medicines contain the same active ingredients and are just as effective as the branded versions, explained Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance.

The global market for generic drugs is projected to reach about $468.08 billion this year, according to a report by Precedence Research, a Canada-based market research firm.

According to Rahul Ahluwalia, founder and director of the Foundation for Economic Development, a policy advocacy organisation, the immediate impact should not be significant as India’s main drug exports are mostly generic medicines.

Nevertheless, Trump’s latest tariff is a troubling sign for India’s pharmaceutical industry, Ahluwalia said. “We should redouble efforts to get a trade deal with the US and EU to enable our industries to have access to large markets.”

An Indian team of negotiators is in Washington this week to try and break the logjam in discussions for a bilateral trade agreement.

Earlier this month, Assistant US Trade Representative Brendan Lynch visited New Delhi to bring the talks back on track. Negotiations had stalled after Trump imposed 50% tariffs on Indian exports, including a punitive 25% on New Delhi’s purchases of discounted Russian oil.