US tariffs pose threat to India's pharma sector

The tariffs proposed by the United States on generic medicines, featuring a 200 percent duty by 2029, not only represent a medium-term risk to India's $9.7 billion pharmaceutical export market but also hurt US patients, analysts said.

They added that Indian pharmaceutical companies can take the challenge as an opportunity to diversify their export destinations and innovate.

US President Donald Trump announced a phased tariff schedule for imported generic drugs: zero duty until August 2028, followed by 100 percent for one year, and 200 percent thereafter. He said in a social media post that the US aimed to push generic drugmakers to move production onshore.

The US accounts for roughly one-third of India's pharmaceutical exports while Indian manufacturers supply nearly half of generic prescriptions dispensed in the US by volume, meaning tariffs will have a material midterm impact on India, said Lekha S. Chakraborty, a professor at the National Institute of Public Finance and Policy, or NIPFP, an autonomous research institute of India's Ministry of Finance.

"While the two-year transition period limits immediate disruption, the scale of the eventual duties underscores structural vulnerabilities with high concentration in a single high-value market, thin margins on many commodity generics, and continued reliance on complex global supply chains,"Chakraborty told China Daily.

"In this sense, the announcement serves as a timely signal for the industry and policymakers to accelerate diversification of export destinations, deepen domestic APIs (active pharmaceutical ingredients) and formulation capabilities, and invest in higher-value innovative and complex generics."

Swaran Singh, a professor of international relations at Jawaharlal Nehru University in New Delhi, said that since India's pharmaceutical sector operates on thin margins, the potential imposition of a 100-200 percent duty from August 2028 is bound to disrupt supply chains and cause shortages.

Pharmaceuticals rank among India's largest export earners, Singh said.

However, the question is whether Washington can easily replace India as its supplier of generic medicines given the scale of India's supplies, noted the expert.

"For onshoring production lines, this two-year runway (until tariffs take effect in August 2028) is too short for typical US plant-validation timelines," he said.

"The February 2026 US-India framework for an interim trade agreement had reportedly carved out 'negotiated outcomes' for generic medicines, though things remain unclear as we speak,"Singh said.

"Finally, for India, this threat of tariffs could as well be a (US) negotiating strategy rather than a certain outcome."

Singh said that an increase in tariffs will result in higher drug prices and out-of-pocket expenses for US patients — from antibiotics to cancer treatments — if manufacturers cannot absorb costs or relocate quickly. The move would also risk the supply of low-cost generic medicines that fill over 90 percent of US prescriptions, he added.

'Wake-up call'

While a two-year transition allows for adjustment, the policy has been seen as a "wake-up call" for India to diversify export destinations, reduce API reliance on global chains, and shift toward high-value innovative generics, said Chakraborty.

Krishnendu Paul, founder of Qbox Sciences Private Limited, said that though the proposed tariffs may create short-term difficulties, they also create an opportunity for the Indian pharmaceutical industry to mature.

"India should reduce its dependence on one market, develop better medicines, strengthen manufacturing, and expand to new countries," Paul said, adding that pharmaceutical companies that adapt now will be stronger in the future.

Paul said this is the right time for India to strengthen innovation and to invest more in research, new medicines, biotechnology, and healthcare startups.

Trinanjan Sarangi, chief intensivist and consultant neuro-anesthesiologist at the Kolkata-based Kothari Medical Centre, said that, from the perspective of a clinician with 25 years of practice, this is a wake-up call for India.

India should diversify its pharmaceutical exports across emerging markets while continuing to serve established markets, Sarangi said.

Arunava Das is a freelance journalist for China Daily.

Contact the writers at vivienxu@chinadailyapac.com