US President Donald Trump’s announcement of a 100% tariff on imported “branded and patented pharmaceutical products” has rattled the global pharma industry, though Indian generic drug makers are largely expected to remain unaffected for now.Trump, in a post on Truth Social on Thursday, stated: “Starting October 1st, 2025, we will be imposing a 100% Tariff on any branded or patented Pharmaceutical Product, unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America. ‘IS BUILDING’ will be defined as, ‘breaking ground’ and/or ‘under construction.’ There will, therefore, be no Tariff on these Pharmaceutical Products if construction has started.“The announcement sent shockwaves across Indian pharma stocks, raising concerns that the scope of the tariffs could later be extended to complex generics, biosimilars, and other advanced formulations, top officials told ET.Industry officials noted that this comes amid an ongoing US government probe under Section 232 of the US Trade Expansion Act, which is evaluating whether pharma imports pose a national security risk. A final decision is expected early next year. The move is seen as a part of a broader push to onshore pharmaceutical manufacturing in the US, reduce foreign dependency, and create domestic jobs.
Why are Indian generics spared?
India exports a large volume of low-cost generic medicines that do not fall under the branded or patented category. This explains why analysts believe the tariff move may not disrupt shipments right away.Currently, Indian pharmaceutical exporters are mostly unaffected as the country primarily supplies unbranded generic drugs and formulations to the US, Suresh Subramanian, national life sciences leader at EY Parthenon told ET.However, he warned that if the tariff regime is broadened to include biosimilars and complex generics, major Indian firms such as Sun Pharma, Cipla, Lupin, and Dr Reddy’s could face financial strain.“Unless we see the actual order, it is too early to rule out anything,” Subramanian added.
Which firm is likely to be most exposed?
A select group of major Indian pharmaceutical manufacturers dominates exports to the US market, contributing approximately 70% of all shipments. Among Indian majors, Sun Pharmaceuticals could feel the heat if branded and specialty drugs are included in the tariff regime. The company has steadily expanded its US portfolio of specialty and branded medicines. Its global specialty sales touched $1.2 billion in FY25, accounting for nearly 20% of annual revenue.“The 100% tariff on imports of branded medicine announced by the US may have an impact on the financials of Sun Pharmaceuticals,” Vishal Manchanda, pharma analyst at Systematix Group told ET.“Out of the company’s total annual revenue of about $6 billion, nearly 15% comes from its branded medicine sales in the US,” Manchanda said.He, however, added that, “Since there is no fine print on the tariff announcement, it may be premature to comment on the impact. The tariff impact would also primarily depend on what value and from which countries Sun procures these branded medicines from.”This comes as Sun Pharma has a strong presence in the US, with its headquarters in New Jersey and a manufacturing plant in Massachusetts, could help soften the impact.On the other hand, Dr Reddy’s shows significant risk exposure, with 47% of its earnings coming from the US market, the highest amongst its competitors, according to the ET report.Nomura projects the company’s US earnings to reach $1.5 billion in FY26, making it particularly susceptible to any tariff modifications.Various pharmaceutical companies show different levels of vulnerability. Lupin anticipates US revenues of $1.1 billion in FY26, with their US manufacturing facilities contributing $70-80 million, representing 6-7% of total earnings, as stated by the organisation.
Higher risk for major global firms
India, Belgium, Italy, and China also export drugs to the US but largely in the generic space. The bigger impact is likely to fall on multinational companies from Ireland, Switzerland, Germany, and Singapore, which dominate the US market for patented medicines.US import statistics from 2024 indicate total pharmaceutical imports valued at $212.82 billion, with India contributing $12.73 billion, equivalent to 5.98%.In comparison, Ireland led with $50.35 billion (23.66%), followed by Switzerland at $19.03 billion (8.94%), and Germany at $17.24 billion (8.10%). These European nations, specialising in high-value branded and patented medications, are likely to experience the strongest initial effects of the new tariff policy, according to a GTRI analysis.
