Trump Tariff Tyranny and Pharma Preparedness
Dr. M Aamir Mirza, Jamia Hamdard
President Trump has recently announced an additional 25 per cent tariff on India, so the overall tariff has reached to 50 per cent. President Trump has further issued warnings that the pharmaceutical sector could face tariff hikes in the range of 200–250 per cent over the next 18 months. At present, Indian pharmaceutical exports out of the tariff ambit. Any move to impose tariffs on Indian pharmaceuticals may risk raising healthcare costs and disrupting supply chains of the U.S. and also making global pharma innovation turbulent. On the contrary, in India, the current situation is anticipated to pose significant challenges in the form of potential job losses, erosion of market share, and a gradual decline in long-term competitiveness of the pharmaceutical sector. India has to evaluate the situation very cautiously and plan accordingly.
On August 27, President Trump announced the imposition of an additional 25 per cent tariff on India, specifically linked to its continued purchase of Russian oil. This move has effectively increased the overall tariff burden on Indian exports to the United States to nearly 50 per cent. The sectors most affected by this escalation are primarily labour-intensive industries such as textiles, gems and jewellery, shrimp, carpets, and furniture, which form a significant share of India’s traditional export basket. Importantly, these tariffs do not currently extend to services, pharmaceuticals (which remain under investigation under Section 232 of the Trade Expansion Act, 1962), smartphones, and energy-related products. However, the situation remains precarious. President Trump has issued warnings that the pharmaceutical sector—one of India’s strongest export domains—could face tariff hikes in the range of 200–250 per cent over the next 18 months. Such a move, if enforced, would dramatically alter the trade dynamics between the two countries. At present, Indian pharmaceutical exports out of the tariff ambit, with U.S. imports of pharma products facing only about 5–10 per cent duties, while the overall average tariff applied by India on American products stands at 10.9 per cent.
The U.S. has exempted the Indian pharma industry from immediate tariff rise, recognising the importance of generic medications for affordable healthcare. The U.S. is the world’s largest pharmaceutical market, imported worth US$212.67 billion in 2024. An average health expenditure per person per year in the U.S. is around USD 15,000. India's share in America's total pharma imports stood at 6 per cent in 2024. As per the data 90 percent of prescriptions dispensed in the US are for generic drugs (47 per cent of which is supplied by India), but they account for only 20 percent of spending. Indian companies have a large number of ANDA filings and maximum number of USFDA-approved facilities (more than 700) outside the U.S, which is now also focusing on branded generics, complex therapies, and API production.
Any move to impose tariffs on Indian pharmaceuticals may risk raising healthcare costs and disrupting supply chains of the U.S. and also making global pharma innovation turbulent. The premise of revised tariff on pharmaceuticals would be to make imported drugs out of competition thereby pushing consumers toward domestic options, and further bolster US pharmaceutical manufacturing and job growth. The tariff policy will harm not only Indian drug manufacturers but also American pharmaceutical companies and consumers. The US-based contract development manufacturing organisations (CDMOs) may benefit in the short term, but down the line it could challenge their ability to meet domestic demand. Increasing the cost of the finished product would likely be largely passed on to end-consumers as the U.S. lacks the infrastructure to produce low-cost generic drugs on a large scale. If Indian drugs are forced out, the American public will have to rely on expensive patented products. This would cause the treatment costs for the average American to increase further, who already have the highest out-of-pocket health expenditure in the world. Indian companies generally operate on very narrow profit margins which is actually operating profitability. Other stress factors are U.S. pricing pressure and regulatory risks from USFDA inspections. Even a 10-15 per cent tariff can make them non-competitive. Ensuring their steady availability is essential for patient treatment. For example, a year of treatment with drugs from multinational companies cost between $10,000 and $15,000, Indian companies provided the same medicines at an unbelievably low price of just $125 to $325, giving hope to AIDS patients. Reddy's Laboratories, Zydus Lifesciences, Hetero Labs, Lupin, Aurobindo Pharma, and Sun Pharmaceutical are major exporters of drugs products (particularly life-saving oncology drugs, antibiotics, and treatments for chronic diseases) and active pharmaceutical ingredients to the U.S. The enhancement of manufacturing capabilities in the U.S is definitely a time taking and cost-intensive assignment, no one is sure that the same policies would remain in place by the time the facilities are operational. Furthermore, which of the products will the companies be opting for, low margin (generic) or high margin (branded)? Most probably, branded. So, there is still a miasma that with the change in tariff policies will the American be getting cheaper generic products or not. Similar will be the scenario if the manufacturing is shifted to any other location of the world.
On the contrary, in India, the current situation is anticipated to pose significant challenges in the form of potential job losses, erosion of market share, and a gradual decline in long-term competitiveness of the pharmaceutical sector. The strategic importance of both the U.S. and China to Indian drug manufacturers has long been recognised by policymakers. The U.S. stands as a primary market for India’s finished pharmaceutical products, accounting for a substantial portion of exports, while China continues to dominate as the key supplier of active pharmaceutical ingredients (APIs) and key starting materials (KSMs). In fact, India relies on China for nearly 70 per cent of its API requirements, while China itself caters to about 40 per cent of the global demand, highlighting the depth of this interdependence. This heavy reliance makes the Indian pharmaceutical industry vulnerable to geopolitical tensions, supply chain disruptions, and price volatility. Consequently, the situation underscores the urgent need for India to diversify its export destinations, strengthen its services and research ecosystem, and implement comprehensive policy reforms that foster self-reliance. Initiatives such as promoting domestic API manufacturing, incentivising innovation, and encouraging public–private partnerships are already underway. These efforts represent the beginning of a broader strategy to address supply chain dependency, enhance resilience, and secure India’s position as a global leader in affordable and quality pharmaceuticals. Several Production-Linked-Incentive (PLI) schemes have been floated. But in the case of thinning the profitability because of expected turbulence in the pharmaceutical sector, the companies may again move for the cheaper source of the APIs and KSMs. By and large there is no major risk to liquidity in the sector. One of the resorts is to adopt a more aggressive approach to pursue growth in India, EU, UK, ANZ, Gulf, ASEAN, CIS and more geographically distributed regions. The big Indian companies can look for establishing or acquiring the manufacturing facilities in the U.S and produce locally through CDMOs. The Indian government and industry representatives are also working to resolve trade disputes with the US and finalise a bilateral trade agreement. Most organisations that strive to provide low-cost medicines to developing nations, such as the World Health Organisation (WHO), UNICEF, Médecins Sans Frontières (MSF), and the International Dispensary Association (IDA), purchase their drugs from Indian companies. UNICEF depends on Indian companies for 50 per cent of the medicines it distributes, and the IDA relies on them for 80 per cent of its drugs. The Clinton Foundation, Global Fund, IDA, and UNICEF, which distribute AIDS medicines to people in 87 countries globally, purchase 70 per cent of their drugs from Indian companies. Furthermore, 89 per cent of the medicines required for the American President’s Emergency Plan for AIDS Relief (PEPFAR) are sourced from Indian companies. These can also be explored more aggressively.
The author is a New Delhi based academician and R&D consultant, having working experience of global healthcare companies. Can be reached at [email protected]
Dr. M. Aamir Mirza is working as an Assistant Professor in the Department of Pharmaceutics, Jamia Hamdard, an NIRF Rank 1 institute and a NAAC ‘A+” grade deemed to be University. He has a multifaceted career portfolio adorned with both industry and academic accomplishments. During his industry stay he became a seasoned scientist and dealt with challenging NCE/NDA development. He is on advisory boards of some international research-based companies of India, New Zealand and Europe. Academics and Research being close to his heart, he has published more than 110 manuscripts in the journals of international repute and has been granted 02 Indian patent and filed for 04. He has contributed several chapters in books published by reputed authors like Elsevier and Bentham. He is amongst the very few scientists globally who has an expertise in Humic substances research. A well-travelled scientist; he has delivered scientific addresses in countries like USA, Austria, Japan, Netherlands, Turkey, Estonia, Spain and Russia. He has been Elite Fellow at University of Malaya (Malaysia) for the last 5 years where he takes classes on the topics related to industrial pharmacy.
