New Delhi: The global pharmaceutical industry is facing a potential shift after former US President Donald Trump announced a roadmap to impose steep tariffs on imported generic medicines, a move that could significantly impact India’s pharmaceutical exports and reshape global drug supply chains.
Under the proposed policy, generic medicines imported into the United States would continue to enjoy zero tariffs until 2028. Thereafter, import duties could rise sharply, with tariffs increasing to 100 percent initially and eventually reaching 200 percent. The proposal is aimed at encouraging pharmaceutical companies to manufacture medicines within the United States, strengthening domestic production and reducing reliance on overseas suppliers.
India, often referred to as the “pharmacy of the world,” is expected to be among the countries most affected if the policy is implemented. The United States remains the largest export destination for Indian pharmaceutical companies, with Indian manufacturers supplying a substantial share of generic medicines consumed in the American market.
The proposed tariff structure reflects a broader effort to rebuild domestic manufacturing under an “America First” strategy. US policymakers have argued that the COVID-19 pandemic exposed vulnerabilities in global pharmaceutical supply chains, highlighting the country’s dependence on imports for both finished medicines and active pharmaceutical ingredients. Increasing local production is also expected to generate employment, attract investment and strengthen national health security.
For Indian drug manufacturers, however, the proposal presents significant strategic and financial challenges. Companies may be compelled to establish manufacturing facilities in the United States within the next two years to retain access to the American market. Such investments would require substantial capital, while significantly higher labour, infrastructure and operational costs in the US could reduce profit margins.
Leading Indian pharmaceutical firms, including Sun Pharma, Dr. Reddy’s Laboratories, Cipla, Lupin and Aurobindo Pharma, may have to reassess their long-term manufacturing and export strategies. Building new facilities, securing regulatory approvals from the US Food and Drug Administration and commencing commercial production within a limited timeframe would demand considerable resources.
The proposed tariffs could also have implications for American consumers. Generic medicines are widely used in the US because they offer affordable alternatives to branded drugs and help contain healthcare costs under government-funded programmes. If imports become significantly more expensive, medicine prices could rise, potentially increasing healthcare expenditure and creating temporary supply shortages during the transition period.
Industry observers note that while the policy applies to all imported generic medicines, its geopolitical implications differ for India and China. The US has long sought to reduce dependence on Chinese pharmaceutical ingredients, while maintaining strong strategic ties with India. Nevertheless, Indian manufacturers continue to rely heavily on Chinese raw materials, making supply chain diversification an important priority.
Experts believe the evolving policy landscape also presents opportunities for Indian companies. Strategic acquisitions of existing manufacturing facilities in the US, adoption of hybrid manufacturing models that combine production in India with final processing in America, diversification into emerging markets across Africa, Latin America and Southeast Asia, and sustained diplomatic engagement between New Delhi and Washington could help mitigate the impact.
The proposal underscores a broader global trend towards economic nationalism and supply chain localisation. Pharmaceutical manufacturing, once viewed largely through the lens of public health, is increasingly becoming part of geopolitical and industrial policy.
For India’s pharmaceutical industry, the coming years are likely to be crucial. The sector’s ability to adapt through investment, innovation and global diversification will determine whether it can maintain its leadership in one of its most important export markets while continuing to strengthen its position as a leading global supplier of affordable medicines.
