100% Pharma Tariff Threat: Why Indian Drugmakers May Dodge the Bullet?

US President Donald Trump announced a bold policy to impose 100% import tariffs on branded and patented pharmaceutical drugs starting October 1, unless companies establish or maintain manufacturing facilities in the United States. The move sent ripples through global markets, with Indian benchmarks like the Nifty 50 and BSE Sensex dropping 0.47% to 24,774.3 and 80,775.23 points, respectively, amid a broad-based sell-off led by a 2.4% decline in the pharma index.

However, despite the initial market panic, industry experts and analysts suggest that Indian pharmaceutical companies, which dominate the generics market, are likely to emerge relatively unaffected due to their business models and strategic investments in the US.

India’s pharmaceutical exports to the US, valued at approximately $10.5 billion in fiscal 2025, account for over a third of the country’s total pharma exports, with a 20% year-on-year growth. The vast majority of these exports are generic drugs—cheaper alternatives to branded medications—produced by major players like Dr Reddy’s Laboratories, Sun Pharma, Cipla, and Lupin.

Unlike multinational giants such as Pfizer and Novo Nordisk, which dominate the branded and patented drug market targeted by Trump’s tariffs, Indian companies primarily supply generics that appear to be exempt from the new policy. Namit Joshi, Chairman of the Pharmaceuticals Export Promotion Council of India, emphasized to PTI, “We don’t export any patented and branded drugs to the US. Right now, it is not for generics. We don’t foresee much of an impact of this notification on the Indian generic pharmaceutical industry.”

A key factor insulating Indian drugmakers is their established manufacturing presence in the US. Companies like Cipla, Dr Reddy’s, and Lupin already operate facilities stateside, aligning with Trump’s requirement for local production. Biocon, another major player, recently commissioned a manufacturing facility in Cranbury, New Jersey, through its subsidiary Biocon Generics Inc., further reducing its vulnerability to the tariff.

Sun Pharma, however, remains an outlier, as it has yet to announce concrete US capital expenditure plans, according to an NDTV Profit report. This uncertainty contributed to a 2% drop in Sun Pharma’s stock, making it the largest loser in the Nifty 50 on the day of the announcement. Natco Pharma also saw a significant decline, falling 3.4%, reflecting market jitters over potential tariff expansions.

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While the current tariff policy focuses on branded drugs, uncertainty lingers about whether complex generics and biosimilars could face similar restrictions in the future, as noted by ICICI Securities in a statement to Reuters. Such an expansion could pose challenges for Indian firms, given the growing importance of biosimilars in their portfolios. Nevertheless, the industry’s strong foothold in generics and proactive investments in US-based manufacturing are likely to mitigate immediate risks.

As Indian pharma stocks navigate short-term volatility, the sector’s resilience and strategic adaptability suggest it is well-positioned to weather Trump’s tariff storm with minimal disruption.

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