US president Donald Trump has unveiled sweeping new trade measures, announcing a 100% tariff on branded and patented pharmaceutical imports beginning 1 October 2025, unless manufacturers are actively building production plants in the country. The announcement, made on his social media platform Truth Social, has sparked concern in global markets and drawn particular attention in India, whose pharmaceutical industry relies heavily on exports to America.
“Starting 1 October 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,” president Trump declared. He clarified that 'building' would be defined as 'breaking ground' or 'under construction', adding that firms already investing in US facilities would not face the new duties.
The measures are part of president Trump’s broader 'America First' trade agenda, which seeks to strengthen domestic manufacturing, reduce import dependence and protect US companies from what he described as 'flooding' of the American market. Alongside pharmaceuticals, the US president also imposed 50% tariffs on kitchen cabinets and bathroom vanities, 30% on upholstered furniture, and 25% on imported heavy trucks, arguing that foreign producers were undermining American jobs and national security.
While the tariff explicitly targets branded and patented medicines—a segment dominated by multinational pharmaceutical giants—India’s drug industry is watching developments closely. The US is India’s single largest market, accounting for 31% or US$8.7bn (billion) of India’s US$27.9bn pharma exports in FY23-24, according to the Pharmaceuticals Export Promotion Council of India (PEPCI). In the first half of 2025 alone, India shipped US$3.7bn worth of medicines to America.
India supplies nearly 45% of the generics and about 15% of biosimilars consumed in the US, with companies like Dr Reddy's Laboratories Ltd, Sun Pharmaceutical Industries Ltd, Aurobindo Pharma Ltd, Lupin Ltd, Zydus Lifesciences Ltd, Cipla Ltd and Gland Pharma Ltd deriving 30%–50% of their revenues from the American market. Although generics are not covered under the latest tariff, analysts caution that the long-term direction of US policy is worrying.
While India, being an exporter of generic drugs, is unlikely to be impacted immediately, there is also a risk that future tariff measures could extend to generics.
President Trump’s move follows months of threats to tax pharmaceutical imports, which had previously been spared in his tariff battles. He has argued that tariffs will encourage drugmakers to localise production and bring down drug costs. However, industry experts are sceptical, pointing out that levies may actually increase healthcare expenses for American consumers while destabilising global supply chains.
Large pharmaceutical companies such as Eli Lilly have already announced multibillion-dollar investments in new plants across the US, moves widely seen as pre-emptive responses to president Trump’s tariff threats. But smaller manufacturers and contract producers, many of whom partner with Indian firms to supply formulations and active pharmaceutical ingredients, could find it difficult to absorb costs or shift production.
For Indian pharma companies, the biggest uncertainty lies in the interpretation of 'branded'. Even generic drugs carry a company label, and a broad definition could bring Indian shipments under scrutiny at US customs.
The Pharmaceutical Research and Manufacturers of America (PhRMA), an influential US lobby group, warned that tariffs would divert resources away from research and development. “Every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or the development of future treatments and cures,” a PhRMA spokesperson says.
Indian equity markets reacted swiftly to the announcement. The Nifty Pharma index fell nearly 2%, with all 20 constituent stocks in the red. Shares of Sun Pharma, Cipla, and Dr Reddy’s led the decline.
Generics supplied by India have long kept drug costs in check in America. Even the hint of disruptions could trigger price spikes or shortages in critical categories such as cancer therapies and infectious disease treatments.
President Trump’s pharmaceutical tariff is the latest in a series of protectionist moves targeting Indian exports. Earlier this year, Washington slapped a 50% tariff on Indian goods with an additional 25% 'penalty' linked to India’s continued purchase of Russian oil. The latest announcement suggests the administration is shifting from country-wide tariffs to product-specific duties, raising fears that other Indian export sectors could come under fire.
For now, Indian pharma exports remain technically outside the tariff’s reach, but the industry recognises the warning signs.
