Build in USA or Bust: Trump Targets Indian Pharma
100% US tariffs hit Indian pharma giants unless they build factories now.
President Donald Trump has unveiled a 100% tariff on branded and patented pharmaceutical imports to the US, effective October 1, 2025. The catch? Companies dodge the hit if they're actively building manufacturing plants on American soil—defined strictly as "breaking ground" or "under construction."
Trump dropped the hammer in a fiery Truth Social post: "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. Thank you for your attention to this matter."
The move zeroes in on high-margin branded drugs, where powerhouses like Pfizer and Novo Nordisk hold sway. But for Indian pharma titans, it's a gut punch. The US gobbles up over a third of India's drug exports, with shipments surging 20% to $10.5 billion in fiscal 2025—$3.7 billion alone in the first half of this year.
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Major players like Sun Pharmaceutical, Biocon, Cipla, Dr. Reddy's Laboratories, Lupin, Zydus Lifesciences, Aurobindo Pharma, and Hetero Labs are in the crosshairs. They've pumped $3.6 billion in goods stateside last year, fueling everything from generics to active ingredients. Uncertainty looms over complex generics and specialty drugs, which could draw future scrutiny.
Bright spots emerge for the prepared: Bengaluru's Biocon just fired up a gleaming $30 million facility in Cranbury, New Jersey, via its US arm Biocon Generics Inc. Acquired from Eywa Pharma in 2023, the plant cranks out two billion tablets annually—putting Biocon tariff-free. Veterans like Cipla, Dr. Reddy's, and Lupin already boast US plants, shielding them from the blast. Sun Pharma, however, might sweat until it greenlights fresh capex.
This isn't Trump's first swing at trade foes. Last month, he slapped a 25% reciprocal tariff on India—plus another 25% penalty for snapping up Russian oil, which he blasts as bankrolling Moscow's Ukraine carnage. India fired back, calling the levies "unfair, unjustified, and unreasonable" amid heated bilateral talks.
The pharma probe traces back to April's national security review of all drug imports, from finished meds to raw ingredients—90% of US biotech firms lean on foreign parts for half their lineup. In July, Trump teased up to 200% tariffs but dangled relocation grace periods. A late-July US-EU deal tacked on 15% pharma duties, signaling the storm's brewing.
With the US importing a staggering $233 billion in pharma last year, Trump's "America First" gambit could turbocharge domestic jobs but spike prices and snarl supply chains. For India's $50 billion industry, it's do-or-die: Build in the US or watch exports evaporate. As trade talks rage, one thing's clear—Big Pharma's global chessboard just got a lot bloodier.
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