Will Domestic Generic Producers Benefit from US Tariffs on Pharmaceuticals?
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Synopsis
The recent US tariff announcement on pharmaceuticals could provide a lucrative opportunity for domestic generic producers, driving consumers towards affordable alternatives. Learn how this shift in policy affects both the Indian pharmaceutical sector and US consumers.
Key Takeaways
- US imposes 100% tariffs on branded pharmaceuticals.
- Domestic generic producers could see near-term gains.
- Generics remain exempt from tariffs.
- Indian companies saved the US healthcare system $219 billion in 2022.
- India supplies over 45% of US generics.
New Delhi, Sep 26 (NationPress) Domestic generic manufacturers are poised for immediate advantages as the rise in prices of branded medications is expected to drive consumers towards more affordable options following the US's announcement of a 100 percent tariff on the pharmaceutical sector starting October 1, analysts indicated on Friday.
Currently, generic drugs remain exempt from these US tariffs. Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), noted that the new tariff applies exclusively to "branded or patented drugs, thereby excluding generics."
Indian pharmaceutical companies provide a significant share of medications to US consumers.
Industry reports indicate that in 2022, medications supplied by Indian firms generated approximately $219 billion in savings for the US healthcare system, totaling $1.3 trillion from 2013 to 2022.
Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, emphasized that the US's imposition of 100 percent tariffs on patented medicines marks a notable change in trade regulations, especially since pharmaceuticals were previously exempt from reciprocal tariffs and Section 232 duties.
“For the Indian pharmaceutical sector, which exports about $20 billion worth of generics to the US—accounting for nearly 40 percent of its consumption—the effects are twofold. Companies exporting branded products to the US may encounter challenges, while domestic generic producers might experience short-term benefits as consumers seek out cost-effective alternatives amidst rising branded drug prices,” he stated.
From essential oncology drugs to treatments for chronic illnesses, India plays a crucial role in stabilizing global healthcare.
Currently, India is responsible for over 45 percent of generic drugs and 15 percent of biosimilars used in the US market.
President Trump has declared that tariffs will not apply to pharmaceutical products for companies establishing manufacturing facilities in the US.
“Beginning October 1st, 2025, a 100 percent tariff will be enforced on branded and patented pharmaceutical products, unless a company constructs their pharmaceutical manufacturing plant in America,” Trump shared on Truth Social.
Point of View
I observe that the recent US tariff on branded pharmaceuticals presents both challenges and opportunities for the Indian pharmaceutical sector. While some companies face headwinds, domestic generic producers are likely to thrive, benefiting consumers seeking cost-effective alternatives. This shift underscores India's pivotal role in the global healthcare ecosystem.
NationPress
26/09/2025
Frequently Asked Questions
What are the implications of the US tariff on branded drugs?
The US's 100% tariff on branded drugs will likely increase prices, pushing consumers towards more affordable generic alternatives.
Are generic drugs affected by the new tariffs?
No, generic drugs remain exempt from the new US tariffs, allowing them to remain cost-effective alternatives.
How much do Indian pharmaceutical companies contribute to the US healthcare system?
In 2022, Indian pharmaceutical companies provided an estimated $219 billion in savings to the US healthcare system.
What percentage of generics does India supply to the US?
India supplies over 45% of generic drugs used in the US.
When will the new tariffs take effect?
The new tariffs on branded pharmaceuticals will take effect on October 1, 2025.
