Headwind for India’s pharma exports to US
There are between 650 and 670 United States Food and Drug Administration-approved manufacturing plants in India — the highest number outside the United States. Increased tariffs could significantly affect Indian generic drug manufacturers, who typically operate on very thin profit margins. If they're unable to pass these additional costs on to consumers, they may be forced to withdraw from the US market.
15 Apr 2025 | By WhatPackaging? Team
Tariffs will affect Indian exports
Donald Trump, president of the United States, has levied tariffs on several countries; reciprocal tariffs on India amounted to 26%, where pharma exports were exempted. India is one of the largest exporters of generics to the US.
Currently, the tariffs have been put on hold for 90 days, excluding China.
Recently, President Trump, during a fundraising gala for the House Republicans, announced that pharma imports would see major tariffs. He didn’t disclose any details. According to President Trump, tariffs on imports will bring manufacturing back to the US as they are the big market.
The US is one of the biggest importers of generics, of which 50% is supplied by Indian pharmaceutical manufacturers. On 2 April, the White House release mentioned pharma as a focus sector. Imposing tariffs on pharmaceuticals could cause a shortage of drugs in the US.
Since there is a lot of uncertainty until Trump makes the announcement, the Indian pharma industry - and their print and packaging partners - should prepare for all possible outcomes. Fixed-rate tariffs for all countries could provide an edge to India’s pharma sector due to cost advantages.
Nearly 50% of generic medicines in the US originate from India. As reported by WhatPackaging? magazine last week, generic drugs make up nine out of 10 prescriptions in the US. This accrues in savings in healthcare costs. According to IQVIA, the consulting firm, the savings from Indian generics are USD 219 billion in 2022.
President Trump intends to kick-start manufacturing in the US with the hopes of building domestic manufacturing capacity and global drug manufacturers setting up facilities in the US. It may not be feasible for manufacturers to set up a base in the US because of higher production costs for generic manufacturers.
For innovators to set up facilities in the US, regulatory approvals could take up to three to four years. In the next 10 years, 70% of patented drugs will lose protection, defeating the purpose of shifting production to the US, as it would not be economically viable for these products, as prices may drop and generics and biosimilars would flood the market.
Since 2 April, Biocon shares are down by 10%, Aurobindo shares are down by 8.6%, and Dr Reddy’s by 4.9%. Sun Pharma, the largest Indian exporter to the US, shares are down by 3.6%. The 90-day pause may provide a breather to Indian drug manufacturers, but uncertainty looms ahead.