Trump's 100% tariffs big threat to India's $10B pharma exports
What's the story
US President Donald Trump has announced a 100% tariff on branded and patented pharmaceutical imports, starting October 1, 2025. The move is likely to have a major impact on India's pharmaceutical exports, which rely heavily on the American market. The new tariffs will not apply if companies are "building" pharmaceutical plants in the US—defined as "breaking ground" or being "under construction."
Export reliance
US largest market for Indian pharma exports
India's pharmaceutical sector is export-heavy, with annual drug and pharmaceutical exports reaching a record $30 billion in FY25. The US is the largest market for Indian pharma exports, accounting for 34.51% of total exports in FY25 at $10.5 billion. Major companies like Dr. Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma, Cipla, and Gland Pharma derive up to half their revenues from the American market.
Market impact
Indian stock market reacts to tariff announcement
The Indian stock market reacted sharply to Trump's tariff announcement, with Sensex and Nifty opening in the red. The Nifty Pharma index fell sharply by 2.42%, hitting an intraday low of 21,445.50. Sun Pharma and Gland Pharma's shares hit their respective 52-week lows after the announcement. Other leading pharmaceutical companies also opened lower by up to 5%.
Tariff expansion
Concerns over expanding tariffs beyond patented drugs
While Trump's announcement specifically targets patented drugs, there are fears that complex generics and specialty medicines from India could also be targeted. This is particularly concerning given that formulations and biologics account for nearly 79% of India's pharma exports. Any move to expand tariffs beyond patented drugs could put pressure on manufacturers as well as US patients who rely on affordable Indian medicines.
Supply disruption
Drugmakers warn tariffs could worsen medicine shortages in US
Ahead of Trump's announcement, Indian drugmakers had warned that steep tariffs could disrupt supplies and worsen medicine shortages in the US. A Himachal Pradesh-based pharma exporter told Hindustan Times in July that if implemented, they would have no choice but to stop supplying drugs to the US, which would hurt patients more than Indian manufacturers. An Andhra Pradesh manufacturer echoed this sentiment, saying tariffs could lead the US to rely more on China for life-saving medicines.