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BUSINESS & TRADE JULY 31, 2026 | The Indian Eye 32

Trump’s Generic Drug Tariffs Raise New

Challenges for India’s Pharma Industry

While the proposed US tariffs have rattled investors, industry leaders believe

India’s cost advantage, established manufacturing base and global role in generic

medicines will limit the long-term impact.

OUR BUREAU tion but also lengthy inspections,
product approvals and regulatory
Washington, DC / New Delhi / Mumbai
clearances. Analysts estimate that
S President Donald Trump’s even after building a new plant, com-
proposal to impose steep tar- panies would require an additional
Uiffs on imported generic med- 12-15 months before commercial
icines has injected fresh uncertainty production could begin, limiting
into one of India’s most important the speed with which domestic US
export sectors, prompting concerns manufacturing capacity can replace
over future market access while also imports.
highlighting the structural strengths Equally important is the un-
that have made Indian pharmaceu- certainty surrounding implementa-
tical companies indispensable to the tion. Market analysts point out that
American healthcare system. the most significant tariff increases
The announcement, which en- would begin only in 2028 and 2029,
visages zero tariffs for two years fol- extending beyond much of the cur-
lowed by duties of 100 per cent in the rent political cycle in the United
third year and 200 per cent from the States.
fourth year, has triggered an imme- This creates room for negotia-
diate market reaction, with shares of Establishing pharmaceutical manufacturing facilities involves not only construction but also tions, policy modifications or even
leading Indian drugmakers coming lengthy inspections, product approvals and regulatory clearances (File photo) changes in implementation depend-
under pressure. ing on future administrations.
Yet, industry executives and an- Meanwhile, India’s domestic
alysts argue that the eventual impact posed timeline itself raises questions (IPA), Indian pharmaceutical com- pharmaceutical market continues
may prove less severe than initial in- about feasibility. Pharmexcil Chair- panies already operate more than 40 to provide a measure of resilience.
vestor sentiment suggests, owing to man Namit Joshi argued that build- manufacturing facilities across the According to an Equirus Securities
the practical challenges of shifting ing a complete generic pharmaceuti- United States, supporting American report, the Indian Pharmaceuti-
generic drug manufacturing to the cal ecosystem requires at least four to employment in manufacturing, re- cal Market recorded its strongest
United States. five years, making the proposed two- search and supply chains. The organ- monthly performance in more than
The proposed tariffs form part of year transition period unrealistic. He isation has indicated it will continue two years in June, with 16 per cent
the Trump administration’s broader added that manufacturers operating engaging with the US administration year-on-year growth and broad-
strategy to revive domestic manufac- on already thin margins would find it to strengthen bilateral cooperation based expansion across major thera-
turing by encouraging companies to nearly impossible to absorb tariffs of in healthcare security. py segments. Companies focused on
establish production facilities in the 100-200 per cent, leaving companies Financial analysts broadly share chronic therapies and new product
US. However, pharmaceuticals pres- with little choice but to pass on costs this assessment. Motilal Oswal Fi- launches have continued to outper-
ent a unique challenge because of to consumers or withdraw from seg- nancial Services believes the pro- form, indicating that domestic de-
the highly regulated nature of the in- ments of the market. posed tariff regime is unlikely to mand remains robust even as global
dustry, long approval timelines and This observation highlights one materially alter the competitive posi- trade uncertainties increase.
the economics of generic medicine of the central dilemmas in the tariff tion of Indian generic manufacturers. Ultimately, the debate over
production. proposal. Generic medicines oper- The firm notes that around 90 per Trump’s tariff proposal is about more
For India, the stakes are signifi- ate on extremely competitive pricing cent of generic prescriptions in the than trade policy. It reflects com-
cant. The United States is the largest models where profit margins are sig- United States are imported, imply- peting priorities between reshoring
overseas market for Indian pharma- nificantly lower than patented drugs. ing that tariffs would affect suppliers manufacturing and maintaining af-
ceutical exports, with Indian com- Unlike high-value innovative med- globally rather than targeting India fordable healthcare.
panies supplying a substantial share icines, generic manufacturers have alone. Moreover, India’s manufac- For India, whose pharmaceuti-
of generic medicines consumed by limited pricing flexibility, making turing cost advantage of 40-60 per cal industry has built its global repu-
American patients. The industry steep tariffs economically difficult to cent over US production would re- tation on supplying high-quality, low-
has earned global recognition as the absorb. main significant even after tariffs are cost medicines, the coming years will
“pharmacy of the world” by produc- At the same time, the industry’s imposed. test its ability to adapt to changing
ing affordable medicines at scale integrated relationship with the US Another practical consideration trade policies while preserving its
while maintaining regulatory com- pharmaceutical ecosystem provides is regulatory complexity. Establish- competitive advantage in one of the
pliance with international standards. an important buffer. According to ing pharmaceutical manufacturing world’s most important healthcare
Industry leaders believe the pro- the Indian Pharmaceutical Alliance facilities involves not only construc- markets.

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