India is the largest supplier of generic drugs to the US, having exported $9.7 billion worth that accounted for 38% of New Delhi’s pharma shipments. The threat should quicken the need to hunt alternative export markets.
Also read: 200% Trump tariff shock? India’s cheap pills may still beat US rivals
Experts told ET the cost economics of generic drug manufacturing, long gestation periods for new facilities make large-scale reshoring difficult in the near term.
Higher Healthcare Costs Seen in US
America also has dependence on low-cost imported drugs, they said. “There is no formal guidance (on US tariff) yet. We only have a tweet. We will see how the situation evolves because we’ve been in those cycles in the past.
It is not practical to move operations like that to the US,” said Erez Israeli, chief executive of Dr Reddy’s Laboratories. “Obviously, if tariffs are imposed, we’ll have to raise the price in the US.
ET BureauEven if it is made in the US, costs will be higher, which will lead to inflation for insurers and retailers.” Industry watchers also believe the two-year time window that Indian drugmakers now have before tariffs would kick in would give them sufficient lead time to diversify and adapt, while American patients and insurers brace for higher healthcare costs.
“Effective August 1, 2026, all generic drugs being brought into the US will continue to have a tariff of zero percent for a two-year period of time, after which the tariff will be raised to 100% for a one-year period of time, and 200% thereafter,” Trump said in his Truth Social post.