US Tariffs on Indian Pharma: Will Generics Escape the Blow?

The United States has announced a 100% import tariff on branded and patented drugs, effective October 2025. The move, aimed at reshaping the global pharmaceutical supply chain, has immediately raised concerns for India, one of the world’s largest exporters of medicines.

The US is India’s biggest pharma market, accounting for more than a third of its exports ( ~10.5 billion in FY25). With such heavy dependence, any trade barrier here can unsettle both companies and investors.

But here’s the key question: will India’s biggest strength, low-cost generics, stay safe?

What Do These Tariffs Cover?

The tariffs announced apply to branded and patented medicines, drugs that are still under intellectual property protection and often sold at premium prices. However, there is an important caveat: companies that already have, or are building manufacturing plants in the US, may be exempt from these tariffs.

At present, the announcement is silent on generics, biosimilars, and APIs (raw materials). Early signals suggest generics may escape this round, but the lack of clarity has made markets nervous. If future tariff rounds expand to include complex generics or biosimilars, Indian exporters could feel real pain.

What’s the Difference Between Branded Drugs, Generics, Biosimilars, and APIs?

• Branded drugs: These are the original medicines created and sold under a company’s brand name. They’re usually protected by a patent, which gives the company exclusive rights to sell them for a number of years. Example: Crocin when it was first launched.
• Generics: After the patent on a branded drug expires, other companies can make the same medicine with the same ingredients and effects, but sell it under a different name, often at a much lower price. Example: Dolo or other paracetamol tablets.
• Biosimilars: These are versions of biological medicines (like insulin or cancer treatments) that are made from living cells. They’re not exact copies, but are highly similar in safety and effectiveness once the original drug’s patent expires.
• APIs (Active Pharmaceutical Ingredients): These are the core raw materials or the active chemical/biological components that make a medicine work. For example, paracetamol is the API inside Crocin or Dolo.

In the US tariff announcement, branded and patented drugs will face 100% tariffs. But it’s still unclear what happens to generics, biosimilars, and APIs, the very areas where India dominates globally.

Why This Matters for India

India is known as the “pharmacy of the world”, and the US is its most lucrative market. Generic medicines form the bulk of India’s exports to America, helping to keep US healthcare costs low.

If tariffs extend to generics, it could:

• Raise medicine prices in the US.
• Shrink margins for Indian companies.
• Push Indian firms to invest more in US-based manufacturing.

Which Companies Could Be Impacted?

Some Indian pharma companies are more exposed to the US than others:

Sun Pharma

• Current tariffs (branded/patented only): 31% of revenue from the US; ~20% from branded specialty drugs (Ilumya, Winlevi, Cequa, Sezaby) that fall directly under tariff scope.
• If tariffs expand: Greater pressure, as specialty growth is US-centric. Generics remain safer for now.

Dr. Reddy’s

• Current tariffs: 40% of revenue from North America, but the portfolio is mostly generics, so minimal direct impact.
• If tariffs expand: Risk rises with injectables and complex generics in the pipeline.

Lupin

• Current tariffs: 38% of revenue from the US; branded portfolio is only ~7%, so limited effect today.
• If tariffs expand: Higher sensitivity, since growth relies on inhalation, biosimilars, and injectables.

Cipla

• Current tariffs: 29% of revenue from North America, largely generics and inhalers; first US biosimilar only launching in FY26.
• If tariffs expand: Exposure increases modestly as biosimilars and complex generics scale up.

Aurobindo Pharma

• Current tariffs: 44% of revenue from the US, but business is mainly generics. Acquisition of a US plant (Indiana, 3.6 bn tablet capacity) offers exemption potential.
• If tariffs expand: Higher risk due to heavy US dependence and pipeline in injectables/complex generics, but US manufacturing presence provides a buffer.

The Bigger Picture

While the near-term risk to generics is limited, this tariff announcement is a reminder that policy risks are real in global pharma.

• On one side, India’s free trade agreement with the UK, which cuts duties on generics and medical devices, offers exporters fresh opportunities.
• On the other side, the US could widen tariffs in the future, especially under national security reviews like Section 232 investigations.

This means companies will likely accelerate their push to:

• Diversify into new markets (Europe, UK, emerging economies).
• Invest in US manufacturing to reduce tariff exposure.

What Lies Ahead

For now, the base case is that generics remain exempt, which limits the direct financial hit to Indian pharma. But the risk case, tariffs extending to complex generics or biosimilars, cannot be ruled out.

Investors and industry watchers should keep an eye on:

• US policy clarifications on generics and biosimilars.
• New investments or acquisitions by Indian pharma in the US.
• Moves by Indian companies to expand exports to the UK and Europe.

Conclusion

The US tariffs are a warning shot rather than a direct hit, at least for now. India’s generic drugmakers may have dodged immediate trouble, but the uncertainty around future policy keeps the sector on edge. As things stand, the story is less about today’s tariffs and more about how India’s pharma sector adapts, by building a stronger presence in the US itself and by spreading risk across new global markets. In short, generics may be safe today, but the road ahead is anything but settled.

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