U.S. President Donald Trump has announced a 25% tariff on Indian imports, citing India’s “excessively high” tariffs among the highest in the world. The new tariff, effective from August 1, also includes penalties on countries purchasing oil from Russia. One of the sectors likely to be significantly impacted is the pharmaceutical industry.
India is the largest supplier of non-patented (generic) drugs to the United States, exporting approximately $8 billion worth annually. The announcement sent shares of major Indian pharmaceutical companies including Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd., and Cipla Ltd. into a decline on July 31. These companies earn over 30% of their revenues from the U.S. market.
Despite the uncertainty, Indian drugmakers are hoping essential medicines may be subjected to a reduced base tariff of 10%.
Tariffs on Indian generic pharmaceuticals would pose serious challenges to the U.S. pharma supply chain, said Namit Joshi, Chairman of the Pharmaceuticals Export Promotion Council of India, in a statement to Bloomberg News. He added that many Indian firms have long been preparing for such duties by acquiring overseas assets and diversifying supply chains.
According to IQVIA, Indian pharmaceutical companies supplied four out of every ten prescriptions filled in the U.S. in 2022. Their products contributed nearly $220 billion in savings to the U.S. healthcare system that year, and over $1.3 trillion in total savings over the last decade.