US Tariff Plan On Generic Drugs May Hit India’s Pharma Exports: GTRI

New Delhi, Jul 24 (KNN) Proposed steep tariffs by the United States on generic medicines could affect India’s pharmaceutical exports, particularly to its largest overseas market, the Global Trade Research Initiative (GTRI) said on Wednesday. However, the think tank noted that the impact is likely to vary across product categories.

Limited Immediate Impact on Low-Cost Generics

GTRI noted, “Many Indian generic medicines sell for seven to ten times less than branded alternatives. Even after a 100 per cent tariff, many products could remain cheaper than branded medicines, meaning much of the additional cost would likely be passed on to US healthcare providers, insurers and patients rather than immediately eliminating Indian exports,” PTI reported.

The additional costs, it added, are likely to be passed on to US healthcare providers, insurers and patients rather than immediately reducing imports.

Pressure on High-Value Segments

The report highlighted that higher-value generic formulations and branded generics could face greater pressure, as increased tariffs may make domestic manufacturing in the US more commercially viable.

GTRI founder Ajay Srivastava said, “The proposed tariffs could significantly affect India's largest pharmaceutical export market,” and advised diversifying towards Europe, Latin America, Africa, and Asia to reduce dependence on the US.

Tariff Roadmap and Policy Shift

In a post on Truth Social, US President Donald Trump announced that generic drugs would continue to face zero import duty for two years starting August 1, after which tariffs would rise to 100 per cent for one year and 200 per cent thereafter. The move is aimed at encouraging domestic production of generic pharmaceuticals in the US.

This follows earlier measures announced on April 2, 2026, imposing tariffs of up to 100 per cent on certain branded medicines and key pharmaceutical ingredients under national security provisions. 

The latest decision extends the tariff framework to generic drugs, covering nearly all pharmaceutical imports.

India’s Exposure to US Market

India exported pharmaceutical products worth USD 25.8 billion in 2025, with USD 9.7 billion—about 37.7 per cent—going to the US. Indian firms account for nearly 47 per cent of all generic prescriptions dispensed in the US, though their share in value terms is estimated at around 30 per cent due to lower pricing.

Several Indian companies, including Sun Pharma, Zydus Lifesciences, Lupin, Aurobindo Pharma, Cipla and Dr Reddy’s Laboratories, already operate manufacturing facilities in the US.

Data and Classification Challenges

GTRI noted that estimating the exact value of generic drug imports into the US is difficult, as customs data do not separately classify generics. These are grouped under a broader category that includes patented and over-the-counter medicines, making industry-based estimates necessary.

However, due to the low pricing of generics, India’s share in the value of US generic imports is estimated at only 30 per cent—well below its share of prescriptions, Srivastava said.

(KNN Bureau)