Indian Pharma Industry Unfazed by 100% US Tariff on Branded Drugs

The announcement of a 100% tariff on branded and patented pharmaceutical drugs by the United States, effective from October 1, 2025, is not expected to significantly impact Indian pharmaceutical companies, according to analysts. Exports to the US, which contribute about 20% to the Indian pharmaceuticals market, primarily consist of generic, off-patent medications that are likely to be exempt from these new tariffs.

Analyst Anuj Sethi, Senior Director of Crisil Ratings, stated, “The imposition of 100% tariff by the US on imports of branded and patented pharmaceutical products may not significantly hurt Indian drug makers.” While some domestic companies do operate in the branded and patented drugs sector, their revenue from these products remains relatively modest.

Impact on the Indian Pharma Landscape

The structure of the Indian pharmaceutical market indicates that the majority of products sold to the US are generics, which are more affordable alternatives to branded drugs. Indian generic medicines are pivotal in managing healthcare costs for American consumers, particularly for conditions such as cancer and diabetes. Approximately 40% of the generic drugs available in the US are imported from India, with Indian companies exporting around USD 20 billion worth of these medications annually. Major players include Sun Pharma, Dr Reddy’s Laboratories, Cipla, Lupin, and Aurobindo Pharma.

Sethi emphasized that the non-discretionary nature of these products means that the impact of the tariff will likely be absorbed by consumers. “The majority of the tariff cost is likely to be passed through,” he noted. Furthermore, some Indian pharmaceutical manufacturers have facilities in the US, which exempts them from the new tariffs altogether.

The US government’s decision to implement these tariffs seems to be a response to ongoing criticism directed at multinational pharmaceutical companies, including Pfizer and Novo Nordisk, for high drug prices in the domestic market. The tariff increase comes amidst a broader discussion about pharmaceutical pricing and affordability.

Future Considerations for Indian Drug Makers

Despite the initial resilience shown by the Indian pharmaceutical sector, Sethi pointed out that ongoing US investigations, particularly under Section 232, could lead to further tariff impositions in the future. This evolving landscape requires continued monitoring, as any additional tariffs could shift the dynamics of Indian pharmaceutical exports.

The strong financial health of Indian pharmaceutical companies further bolsters their capacity to navigate these changes. “Strong balance sheets support the credit quality of these companies,” Sethi added. As the pharmaceutical industry adapts to these new tariffs, the focus on generic medications may provide a buffer against potential challenges in the branded drug market.

In conclusion, while the US tariffs pose challenges to the branded drug segment, the Indian pharmaceutical industry appears well-positioned to maintain its significant role as a supplier of affordable medications to the US market.