The proposed 100-200% US tariffs on generic drugs could push up medicine prices for US patients or lead to shortages if drugmakers cannot absorb the higher costs, Lupin executive director, global CFO & head of API Plus SBU Ramesh Swaminathan said. He also said shifting production to the US would not be easy without firm commitments on volumes and prices, along with possible government support.
“The day president Trump actually comes out with tariffs on generics in US, the cost of medicine will go up,” Swaminathan said. Drugmakers would initially seek to pass on the additional costs, but intense competition in commoditised generics could limit their ability to do so. In such a situation, some manufacturers could be forced to stop production, potentially leading to shortages. “So either way, I think the consumer will be hurt,” he said.
In August, US president Donald Trump announced a phased tariff plan on generic drugs, with imports facing no tariff for two years from August 1, 2026. The duty will rise to 100% in August 2028 and 200% in August 2029, as the administration seeks to push drugmakers to shift production to the US.
Swaminathan also questioned whether shifting generic drug production to the US would be commercially viable. Companies would need clear commitments on volumes and prices along with potentially government subsidies before investing in local capacity. “Unless there are guarantees in place, nobody will actually do this,” he said.
Lupin is not currently affected by the latest Section 232 tariffs – up to 100% on imported patented pharma and active pharmaceutical ingredients (APIs) – since its products sold in the US are manufactured locally, Swaminathan said. The company also has limited exposure to branded drugs in the US.
However, Lupin would continue to invest in both Somerset and coral springs manufacturing units to manufacture products that are feasible from an economic point of view.
Separately, Lupin sees significant long-term potential in the GLP-1 segment despite signs that demand has plateaued following semaglutide’s patent expiry. The company’s strong presence in diabetes and cardiovascular therapies makes the category a key focus.
“If somebody can succeed in this molecule, it is going to be us,” Swaminathan said. Lupin has partnered with Zydus Lifesciences to market generic semaglutide in the domestic market and is also bringing Bofanglutide, a fortnightly GLP-1 injection, through a partnership with a Chinese company.
Swaminathan said the long-term opportunity remains substantial because of the high diabetes burden and the links between diabetes, obesity, cardiovascular disease and kidney disease.
The company is simultaneously seeking to move up the value chain through complex generics, specialty medicines and biosimilars. “Our focus area is really more complex stuff, a bit of biosimilars, and then looking at specialty the way we are doing,” Swaminathan said.
However, moving up the value chain will require the broader industry to overcome its cost and scale disadvantage against China, particularly in APIs. Domestic manufacturers face higher logistics and energy costs, with logistics costs at least 14-15% higher than in other markets and electricity more expensive than in China. The global China-plus-one strategy could offer an opportunity, but the industry needs to move quickly to capitalise on it.
“China has already moved beyond APIs and generics into innovative drugs and biotechnology. Around 50% of Investigational New Drug (IND) filings are coming from China,” Swaminathan said, adding that for the domestic industry, the transition into biologics, biosimilars, antibody-drug conjugates, gene therapy and CAR-T remains a “long way” off. “India is nowhere in the picture. Our continued focus on re-engineering existing small-molecule drugs will not move the needle and will leave companies with wafer-thin margins,” he said.