Trump's pharma tariffs spare generics but Indian firms face risks
What's the story
US President Donald Trump has announced a 100% tariff on "any branded or patented" drugs imported into the country from October 1. The US is the largest market for Indian pharma exports, accounting for nearly 35% of total $30 billion exports in FY25 at $10.5 billion. India exports mostly generic medicines, so it may not be greatly affected by the tariff right now. But future US rules could target generics.
Tariff details
Ongoing US investigation into pharmaceutical imports
Trump's tariff announcement specifically targets branded or patented drugs, sparing generics. However, pharmaceutical companies are still uncertain about the future of tariffs due to an ongoing US government investigation under Section 232. This probe is looking into whether pharmaceutical imports pose a national security threat. The investigation covers finished drugs, active pharmaceutical ingredients (APIs), key starting materials, and medical countermeasures. A final report is due by December 27, 2025, with a presidential decision expected by March 2026.
Market response
Impact on Indian market
The tariff announcement has already started affecting the market. Shares of Sun Pharma, India's largest drugmaker that sells specialty branded drugs in the US, fell by 2.5% to ₹1,586.5 at 3:20pm on BSE. This was despite a year-on-year rise of 17.1% in specialty sales in the US to $1.216 billion, which now account for 19.7% of Sun Pharma's consolidated revenues. The Nifty Pharma index also fell sharply by 2.42%, hitting an intraday low of 21,445.5.
Future concerns
Indian firms consider portfolio realignment, manufacturing shifts
The threat of pharma-specific tariffs has led Indian firms to consider portfolio realignment and manufacturing shifts. Executives are worried that tariffs above 10% could make high-volume, low-margin products unviable, forcing them to stop supplies. Indian generics account for nearly half of all drugs covered by Medicare and commercial insurance plans in the US.