200% Trump tariff shock? India’s cheap pills may still beat US rivals

The think tank, in a report titled “India’s Generic Drug Exports Face New U.S. Tariff Threat”, said many Indian generic medicines are priced seven to 10 times lower than branded alternatives, which could allow them to remain cost competitive even after the proposed tariffs of up to 200% come into effect from August 2029.

Also Read: Trump’s 200% drug tariff plan: Is India’s pharma industry about to face an economic storm?

GTRI said the additional cost burden could potentially be passed on to US healthcare providers, insurers and patients rather than immediately resulting in a loss of market share for Indian drugmakers.

The report comes after Trump announced that imported generic medicines would continue to enter the US duty-free until August 1, 2028, giving global drugmakers a two-year window to shift production to America. After this transition period, imported generics would face a 100% tariff for one year, followed by a 200% tariff from August 2029 unless manufacturers establish production facilities in the US.

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GTRI founder Ajay Srivastava said the proposed tariff measures underline the need for India to reduce vulnerabilities in its pharmaceutical supply chain, particularly its dependence on imported active pharmaceutical ingredients (APIs), while also expanding exports to markets beyond the US.

India faces the biggest exposure

India is among the countries most exposed to the proposed tariff regime because of its dominant position in the US generic drug market.According to the report, India exported $25.8 billion worth of pharmaceuticals globally in 2025, of which $9.7 billion, or 37.7%, was shipped to the US, making America India’s largest pharmaceutical export market.

Also Read: Trump’s Generic Drug Tariffs Explained: What it means for Indian pharma before the 200% storm

Indian companies supply around 47% of generic prescriptions dispensed in the US, making India the largest source of affordable generic medicines for American consumers. However, due to the low prices of generic drugs, India’s share in the value of US generic imports is estimated at around 30%, below its share by prescription volume.

Trump’s pharma tariff strategy expands

The latest announcement completes Trump’s broader pharmaceutical tariff push, which now covers branded medicines, pharmaceutical ingredients and generic drugs.

In September 2025, Trump announced plans for a 100% tariff on imported branded and patented medicines, though that proposal was later replaced.

In April 2026, the US administration introduced tariffs of up to 100% on select branded medicines and key pharmaceutical ingredients under the Section 232 national security framework, while excluding generic medicines at the time.

The latest move brings generic medicines into the proposed tariff framework, leaving almost no major pharmaceutical category outside Washington’s reshoring strategy.

US generic market faces supply chain challenge

The US imported $213 billion worth of pharmaceutical products in 2025, including $94.1 billion worth of finished medicines sold in retail packs, a category that includes generic medicines.

However, estimating the exact value of generic drug imports remains difficult as US customs data does not separately classify generic medicines. Instead, they are grouped under HS 3004, which also includes patented medicines, branded generics and over-the-counter drugs.

Impact on Indian companies likely to vary

The proposed tariffs are unlikely to affect all Indian pharmaceutical exports equally.

GTRI said higher-value generic formulations and branded generics could face greater pressure, as manufacturing these products in the US could become commercially viable. However, low-cost essential generic medicines may continue to maintain their market presence because of India’s pricing advantage.

The report said shifting large-scale generic drug production to the US would be challenging as the industry operates on thin margins and relies heavily on global supply chains, particularly for APIs sourced from countries including India and China.

Building a fully domestic US pharmaceutical supply chain would require significant investments and could increase medicine prices, the report added.

Indian drugmakers already have US manufacturing footprint

Several leading Indian pharmaceutical companies already operate manufacturing facilities in the US, which could help them navigate potential tariff barriers.

Companies including Sun Pharma, Zydus Lifesciences, Lupin, Aurobindo Pharma, Cipla and Dr Reddy’s Laboratories have FDA-approved manufacturing facilities in the country.

Cipla is expanding production at its facilities in Massachusetts and New York, while Dr Reddy’s Laboratories has indicated that it would consider increasing US manufacturing if commercially viable. Sun Pharma, however, has said its existing US manufacturing footprint is sufficient and that it has no immediate expansion plans.

GTRI flags China dependence as bigger risk

Beyond US tariffs, GTRI highlighted dependence on China for pharmaceutical inputs as a larger strategic concern for India.

The report said around 70% of chemical-based active pharmaceutical ingredients (APIs) used by Indian drugmakers and nearly 90% of biologic inputs come from China.

India was once a major API producer but has gradually become reliant on imports. GTRI said any disruption in Chinese API supplies could create risks for India’s pharmaceutical manufacturing ecosystem.

The think tank recommended rebuilding India’s API manufacturing capacity, reducing dependence on a single supplier and expanding pharmaceutical exports to Europe, Latin America, Africa and Asia.

India’s pharmaceutical exports by destination (CY2025)

For now, the two-year transition period gives pharmaceutical companies time to reassess manufacturing strategies, but the proposed tariffs signal Washington’s push to bring more drug production back to the US.