US Tariff on Generic Drug Imports: Indian Pharma Faces Uncertainty, US Consumers May Pay More

U.S. President Donald Trump has announced a new tariff policy on generic drug imports, giving pharmaceutical companies a two-year window to set up manufacturing facilities in the United States. After August 2028, imported generic drugs could face tariffs of up to 200 per cent.

The announcement, made on Wednesday (July 22, 2026) via social media, has significant implications for India, which sends more than a third of its pharmaceutical exports to the U.S. While Indian drugmakers reacted cautiously, they warned that higher tariffs would ultimately increase medicine costs for American consumers.

Mr. Trump said the measure aims to encourage generic drug production in the U.S. and reduce dependence on overseas supply chains. Under the policy, generic drugs imported from August 2026 to July 2028 will face zero tariff; from August 2028 to July 2029, a 100 per cent tariff; and 200 per cent thereafter. Patented and innovative medicines remain exempt.

The announcement rattled pharmaceutical stocks in India, with the Nifty Pharma index falling 1.31 per cent. Industry executives said they would adopt a wait-and-watch approach but noted that any additional costs would likely be passed on to consumers.

“It’s not practical to move operations like that to the U.S. overnight. If tariffs are imposed, we will have to raise prices,” said Erez Israeli, Chief Executive Officer of Dr. Reddy’s Laboratories. He added that the company was not planning immediate changes and that policy positions could evolve.

According to the Global Trade Research Initiative (GTRI), India is among the countries most exposed to the proposed measure. India exported pharmaceutical products worth $25.8 billion in 2025, of which $9.7 billion (37.7 per cent) went to the United States, its largest overseas market. Indian firms account for nearly 47 per cent of all generic prescriptions dispensed in the U.S., making India the largest supplier of affordable generic medicines.

GTRI founder Ajay Srivastava said many Indian generics could remain competitive despite the tariffs because they are significantly cheaper than branded alternatives. However, large-scale relocation of generic drug manufacturing to the U.S. would be challenging, given the industry’s reliance on global supply chains and imported active pharmaceutical ingredients.

Granules India Executive Director Priyanka Chigurupati said the company’s three U.S. facilities position it well to support increased local manufacturing. However, she cautioned that higher generic drug prices could ripple across the healthcare system and affect patient affordability.

Indian Pharmaceutical Alliance Secretary General Sudarshan Jain said Indian companies already have a substantial U.S. presence, with more than 40 facilities supporting jobs, manufacturing and research. India, he said, remains a trusted partner in supplying affordable, quality medicines to American patients.

Pharmexcil Chairman Namit Joshi said the announcement provides welcome clarity. “The zero-tariff window through 2028 gives the industry a meaningful runway, and we see this as time we can use productively — to keep strengthening our position across multiple markets rather than relying on any single one.”