Analysts See Limited Impact of Planned U.S. Generic Drug Tariffs on Indian Pharma
New Delhi–Indian pharmaceutical companies supplying medicines to the United States are likely to face limited disruption from President Donald Trump’s planned tariffs on imported generic drugs, analysts said Wednesday.
Trump has announced that imported generics will remain tariff-free for two years beginning Aug. 1, 2026, before facing duties of 100% and later 200%. The phased plan is intended to encourage overseas drugmakers to establish manufacturing operations in the United States.
Analysts said several factors could reduce the effect on Indian manufacturers, including the structure of their U.S. operations and India’s cost advantage in producing generic medicines.
Many Indian pharmaceutical companies operate through U.S. subsidiaries, and the price at which medicines enter the country can be significantly lower than the price at which they are ultimately sold, said Tushar Manudhane, Senior Vice President and Institutional Research Analyst for Healthcare at Motilal Oswal Financial Services Ltd.
The tariff would presumably be applied to the value of the products when they enter the U.S. market, he said.
Manudhane also noted that about 90% of generic prescriptions in the United States are supplied through imports. Any tariff would therefore affect manufacturers from multiple countries rather than targeting India alone.
“Also, the concept of outsourcing to countries like India is based on 40-60 per cent lower cost of manufacturing in India compared to that in US. Tariff implementation would still fall short and would not lower this advantage of low cost manufacturing from India,” Manudhane explained.
Building new generic drug manufacturing capacity in the United States would also be a lengthy process. Establishing a plant could take at least two years, followed by inspections and a product approval process lasting another 12 to 15 months.
“Above factors questions the economic viability of setting up a manufacturing plant in US for generics. This effectively would mean minimal impact on the Indian pharma companies supplying medicines to US market,” Manudhane said.
India is frequently described as the “pharmacy of the world” because of its role as a major supplier of affordable generic medicines.
Indian generics account for nearly 40% of medicines sold by volume in the United States.
India exported $9.7 billion in pharmaceutical products to the United States during fiscal 2024-2025, representing about 38% of its total global pharmaceutical exports of $25.8 billion, according to the Global Trade Research Initiative.
Trump said the tariff schedule would give foreign manufacturers two years to build U.S. production facilities before the higher duties take effect. The administration has presented the plan as part of a broader effort to reduce American dependence on overseas pharmaceutical production. (Source: IANS)
