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    BUSINESS & TRADE                                                          JULY 31, 2026    |  The Indian Eye 32

              Trump’s Generic Drug Tariffs Raise New

               Challenges for India’s Pharma Industry

                     While the proposed US tariffs have rattled investors, industry leaders believe

                 India’s cost advantage, established manufacturing base and global role in generic

                                               medicines will limit the long-term impact.

            OUR BUREAU                                                                                            tion  but  also  lengthy  inspections,
                                                                                                                  product  approvals  and  regulatory
            Washington, DC / New Delhi / Mumbai
                                                                                                                  clearances.  Analysts  estimate  that
                   S President Donald Trump’s                                                                     even after building a new plant, com-
                   proposal to impose steep tar-                                                                  panies  would  require  an  additional
            Uiffs on imported generic med-                                                                        12-15  months  before  commercial
            icines has injected fresh uncertainty                                                                 production  could  begin,  limiting
            into  one  of  India’s  most  important                                                               the  speed  with  which  domestic  US
            export  sectors,  prompting  concerns                                                                 manufacturing capacity can replace
            over future market access while also                                                                  imports.
            highlighting the structural strengths                                                                     Equally  important  is  the  un-
            that  have  made  Indian  pharmaceu-                                                                  certainty  surrounding  implementa-
            tical companies indispensable to the                                                                  tion. Market analysts point out that
            American healthcare system.                                                                           the  most  significant  tariff  increases
                The  announcement,  which  en-                                                                    would begin only in 2028 and 2029,
            visages zero tariffs for two years fol-                                                               extending  beyond  much  of  the  cur-
            lowed by duties of 100 per cent in the                                                                rent  political  cycle  in  the  United
            third year and 200 per cent from the                                                                  States.
            fourth year, has triggered an imme-                                                                       This  creates  room  for  negotia-
            diate market reaction, with shares of   Establishing pharmaceutical manufacturing facilities involves not only construction but also   tions,  policy  modifications  or  even
            leading  Indian  drugmakers  coming     lengthy inspections, product approvals and regulatory clearances (File photo)  changes  in  implementation  depend-
            under pressure.                                                                                       ing on future administrations.
                Yet,  industry  executives  and  an-                                                                  Meanwhile,  India’s  domestic
            alysts argue that the eventual impact   posed timeline itself raises questions   (IPA),  Indian  pharmaceutical  com-  pharmaceutical  market  continues
            may prove less severe than initial in-  about  feasibility.  Pharmexcil  Chair-  panies already operate more than 40   to  provide  a  measure  of  resilience.
            vestor sentiment suggests, owing to   man Namit Joshi argued that build-  manufacturing  facilities  across  the   According  to  an  Equirus  Securities
            the  practical  challenges  of  shifting   ing a complete generic pharmaceuti-  United States, supporting American   report,  the  Indian  Pharmaceuti-
            generic  drug  manufacturing  to  the   cal ecosystem requires at least four to   employment  in  manufacturing,  re-  cal  Market  recorded  its  strongest
            United States.                    five years, making the proposed two-  search and supply chains. The organ-  monthly performance in more than
                The proposed tariffs form part of   year transition period unrealistic. He   isation has indicated it will continue   two years in June, with 16 per cent
            the Trump administration’s broader   added that manufacturers operating   engaging with the US administration   year-on-year  growth  and  broad-
            strategy to revive domestic manufac-  on already thin margins would find it   to  strengthen  bilateral  cooperation   based expansion across major thera-
            turing by encouraging companies to   nearly impossible to absorb tariffs of   in healthcare security.   py segments. Companies focused on
            establish production facilities in the   100-200 per cent, leaving companies   Financial analysts broadly share   chronic  therapies  and  new  product
            US. However, pharmaceuticals pres-  with little choice but to pass on costs   this assessment. Motilal Oswal Fi-  launches  have  continued  to  outper-
            ent  a  unique  challenge  because  of   to consumers or withdraw from seg-  nancial  Services  believes  the  pro-  form,  indicating  that  domestic  de-
            the highly regulated nature of the in-  ments of the market.        posed  tariff  regime  is  unlikely  to   mand remains robust even as global
            dustry, long approval timelines and   This  observation  highlights  one   materially alter the competitive posi-  trade uncertainties increase.
            the  economics  of  generic  medicine   of the central dilemmas in the tariff   tion of Indian generic manufacturers.   Ultimately,  the  debate  over
            production.                       proposal.  Generic  medicines  oper-  The  firm  notes  that  around  90  per   Trump’s tariff proposal is about more
                For India, the stakes are signifi-  ate on extremely competitive pricing   cent of generic prescriptions in the   than  trade  policy.  It  reflects  com-
            cant. The United States is the largest   models where profit margins are sig-  United  States  are  imported,  imply-  peting  priorities  between  reshoring
            overseas market for Indian pharma-  nificantly lower than patented drugs.  ing that tariffs would affect suppliers   manufacturing  and  maintaining  af-
            ceutical  exports,  with  Indian  com-  Unlike  high-value  innovative  med-  globally rather than targeting India   fordable healthcare.
            panies supplying a substantial share   icines,  generic  manufacturers  have   alone.  Moreover,  India’s  manufac-  For  India,  whose  pharmaceuti-
            of  generic  medicines  consumed  by   limited  pricing  flexibility,  making   turing  cost  advantage  of  40-60  per   cal industry has built its global repu-
            American  patients.  The  industry   steep tariffs economically difficult to   cent  over  US  production  would  re-  tation on supplying high-quality, low-
            has earned global recognition as the   absorb.                      main significant even after tariffs are   cost medicines, the coming years will
            “pharmacy of the world” by produc-    At the same time, the industry’s   imposed.                     test its ability to adapt to changing
            ing  affordable  medicines  at  scale   integrated relationship with the US   Another practical consideration   trade  policies  while  preserving  its
            while  maintaining  regulatory  com-  pharmaceutical  ecosystem  provides   is  regulatory  complexity.  Establish-  competitive advantage in one of the
            pliance with international standards.  an  important  buffer.  According  to   ing  pharmaceutical  manufacturing   world’s  most  important  healthcare
                Industry leaders believe the pro-  the Indian Pharmaceutical Alliance   facilities  involves  not  only  construc-  markets.

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