While US president Donald Trump has stated that his administration will put “small” tariffs on pharmaceutical imports initially, and raise them to a whopping levels of 150-250% in 1-1.5 years, Indian drug makers warn that the US would stand to lose if the threat is carried out.
The Price of Disruption
A spokesperson for the leading pharma association told FE that it would be difficult for the Indian companies to absorb the extra cost due to the proposed tariffs, but added that companies would be shifting focus on other regions. “More than Indian companies, the US consumers will be affected the most because no other country can provide the generic drugs to the US at India’s price and scale,” he said.
The Data: India’s Critical Role in the US Market
Bhavin Mukund, vice chairman of Pharmexcil said that a tariff rate of this magnitude must carefully consider its impact on patient access to affordable and quality medicines. “India has long been a trusted and reliable supplier of essential drugs globally, including to the US, and we remain committed to constructive engagement with stakeholders to ensure uninterrupted, resilient supply chains that balance healthcare needs with trade objectives,” he said.
“The US is constantly facing drugs shortage. High tariffs are going to exacerbate the situation and render the US consumers helpless. Even if a domestic manufacturer plans to shift their manufacturing to the US, it will still take at least 2-3 years to set up a facility. Since no other country has the capacity to produce generics at a large scale – except China which is already facing strategic issues with the US – who is going to meet the US demand,” said the pharma association official quoted above.
India’s pharma exports stood at over $30 billion in FY25 with over a third going to the US. In volume terms, Indian accounts for about 40% of US generics imports.