Trump delivers another bitter tariff pill. Who’s set to bite the dust?

A new day, a new tariff hand dealt by U.S. President Donald Trump and this one puts spotlight on the pharmaceutical table, with the pot too big for India’s drugmakers to ignore.

From October 1, the White House will charge the world with 100% tariffs on patented drugs entering the US, barring those who have manufacturing facilities set up here or are under construction. In a post on Truth Social, Trump said: “Starting October 1st, 2025, we will be imposing a 100 per cent 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.’”

However, the post leaves many questions unanswered, like holding a poker hand without seeing the dealer’s cards. It is unclear which drugs will be taxed, how “patented” or “branded” will be defined, and whether some Indian generics or APIs could be affected. Branded generics and APIs used in larger products could face duties. Until a formal order clarifies the rules, Indian pharmaceutical companies remain in, making this a high-stakes game.

It is imperative to know that branded drugs are the original, patent-protected medications sold under a company’s name, while generics are equivalent versions made after the patent expires, with the same active ingredients and effectiveness but usually lower cost.

Now, coming straight to the point-- there is a reason why India is labelled as the 'pharmacy of the world'. Numbers show that any attempt to curb Indian pharmaceutical companies, the largest suppliers of affordable medicines to the US, could end up hurting the American healthcare system more than Indian drugmakers.

India's pharma dominance in US

In 2022, four out of every ten prescriptions filled in the US came from Indian companies, including 47% of all generics and 15% of biosimilars. Indian firms dominated key therapy areas such as hypertension, mental health, lipid regulators, nervous system disorders, and antiulcerants, supplying more than half the prescriptions in these categories.

The scale of this supply translates into significant savings for American patients. Medicines from India saved the US healthcare system $219 billion in 2022 alone and a total of $1.3 trillion between 2013 and 2022.

So, will India go all in or check or fold? India’s pharmaceutical exports have been on a strong growth trajectory. Annual exports touched a record $30 billion in FY25, driven by a 31% surge in March year-on-year, with August 2025 alone showing a rise from $2.35 billion in August 2024 to $2.51 billion. According to Pharmexcil, in FY24, about $8.7 billion (31%) of exports went to the U.S., and in the first half of 2025, $3.7 billion worth of pharma shipments were sent overseas.

Simply put, the tariff blow may certainly have an impact on the drugmakers, too. However, largely New Delhi's exports are shielded as they are generic and big players have their plants set up in the States.

The chatter around pharma tariffs and its impact on India has been going on for long now, with the Indian drugmakers exuding confidence in the past, calling it 'a move that could hurt the American healthcare system more than India's economy.'

Also Read: Trump's 100% tariff on pharma will not impact generic makers, says Indian Pharma Alliance

As quoted by ANI in July, Dilip Kumar, Chairman of Medical Tourism at the Chamber of Commerce, said, “He is trying to kill the market of the Indian economy, but it is not going to happen. We are exporters, especially of medical equipment, pharmaceuticals, and disposables, which mostly come from India. The American market is dependent upon Indian and Chinese markets.” He added, “India won't be impacted, as we will go by the route of exporting to European countries. We can survive in the toughest times and bounce back.”

Highlighting India’s critical role in the global pharmaceutical supply chain, Namit Joshi, Chairman of Pharmexcil, in July had said, “India has long been a cornerstone of the global supply chain for affordable, high-quality medicines, particularly in the generic drug market, where it supplies nearly 47 per cent of the U.S.'s pharmaceutical needs. Indian pharmaceutical companies play a vital role in ensuring the affordability and availability of essential medications, including life-saving oncology drugs, antibiotics, and chronic disease treatments.”

He warned that any disruption would lead to shortages and higher costs in the U.S., noting, “The immediate consequences of these tariffs will likely result in increased costs for essential drugs, the long-term impact will be even more severe. Efforts to shift pharmaceutical manufacturing and API production to other countries or within the U.S. will take at least 3-5 years to establish meaningful capacity.”

Cut to today, Nifty pharma dived 2.5% in the opening session with major losers being Sun Pharma, Zydus, Shilpa Medicare, Lupin and Dr. Reddy's, all trading in red.

Also read: Trump slaps 100% tariff on branded drugs; Indian pharma companies see limited near-term impact

Potential revenue at risk for Indian pharma majors

Dr. Reddy's is the most exposed among Indian pharma firms, with nearly $1.5 billion of its FY26 revenues linked to the US market. Since only a small fraction of its products, like gSuboxone, are manufactured in the US (less than 15% of FY27F revenues), the bulk of its American operations remain vulnerable to Trump’s tariffs.

Sun Pharma follows closely, with around $2.1–2.3 billion of FY26 revenues at potential risk. Its specialty brands, which make up 55–57% of US revenues, are largely produced outside the US, making them susceptible to the 100% tariff.

Also Read: Which pharma major is most vulnerable to Trump's 100% tariff?

Other Indian majors face varied exposure: Lupin’s US revenues of $1.1 billion, Zydus Lifesciences at $1.3 billion, and Aurobindo Pharma at $1.6 billion could see earnings pressure, though some have partial US manufacturing. Cipla appears relatively insulated, with approximately $900–950 million in US-linked revenues and a significant portion produced domestically, offering a buffer against tariff escalation.

The stakes maybe high for America

Trump's latest tariff move, aimed at bringing domestic pharmaceutical production into play, may be more of a bluff than a winning hand. This one stat backs it: US healthcare spending grew 7.5% in 2023, reaching $4.9 trillion or $14,570 per person, and accounted for 17.6% of the nation’s GDP, highlighting how sensitive voters are to rising medical costs.

In 2024, America imported nearly $233 billion in pharmaceutical and medicinal products, AP reported citing data from the Census Bureau. The prospect of prices doubling for some medicines could send shock waves to voters as healthcare expenses, along with Medicare and Medicaid costs, potentially rise.

Notably, the US healthcare system is heavily reliant on Indian generics, which make up 90% of prescriptions but only 20% of spending, highlighting that most drug spending goes toward patent-protected medicines, as per Observer Research Foundation (ORF).

Also Read: More tariffs by Trump: Branded pharma hit with 100% duty, and the list doesn't end there

Furthermore, Trump administration's push for global pharmaceutical companies to set up local manufacturing in the US may not see widespread relocation by Indian majors, who already have plants in the US. “Setting up manufacturing in the US is both costlier—50–60% higher than India—and time-intensive, requiring three to four years for approvals. For Indian firms, the cost economics of manufacturing locally in India are far superior,” said JP Morgan analystm, Bansi Desai.

According to ORF estimates, it is suggested that scaling domestic manufacturing would take at least 5-10 years, requiring significant investment, compliance with strict regulatory measures, and a skilled workforce. Combined with Trump’s MFN pricing policy, which benchmarks innovative drug prices against the lowest in comparable OECD countries, profitability and R&D investment could be severely affected, discouraging US-based production and innovation, and creating further health security risks.

'Picture abhi baaki hai'

Fears have most certainly gripped Indian players, bleeding pharma Nifty today is a testament. But why? Trump & Co have had a reputation from turning away from announced decisions. While Trump's announcements infer something, White House's clarification brings another picture to light.

Like H-1B, only a clear executive order can bring clarity to what kind of pharma imports will increase US prescription costs because some fear 'branded' drugs may not just be 'patented' as the President's announcement does not make it well defined.

More to say, Indian generic drugs do carry a label and since the term 'branded' lacks a definition here, it is not clear if Indian drugmakers are completely safe. Furthermore, the Active Pharmaceutical Ingredient (APIs) sold to drugmakers in the US or elsewhere, as part of the larger 'branded' pharmaceutical products, it is yet to be ascertained if those exports will be charged too.