February 19, 2025 – The Indian Pharma Sector has raised concerns over former U.S. President Donald Trump’s proposal to impose a 25% or higher tariff on pharmaceutical imports, including generic medicines. The move, announced as part of Trump’s broader economic policy, could disrupt the global supply chain and significantly impact drug prices in the U.S.
“It’ll be 25 per cent and higher, and it’ll go very substantially higher over the course of a year.” – Trump said
India is a critical supplier of generic medicines to the U.S., accounting for nearly 47% of the country’s total supply. The Indian Pharmaceutical Alliance (IPA) has warned that increased tariffs could lead to shortages and higher prices for American consumers, given the U.S.’s dependence on Indian-manufactured drugs.
After US President Donald Trump put forth his suggestion, Nifty Pharma index shares dropped as high as 10 percent. Heavyweight drug giants such as Dr Reddy’s Laboratories, Sun Pharma and Cipla registered huge slumps.
According to the Pharmaceuticals Export Promotion Council of India (Pharmexcil), India’s pharmaceutical exports to the U.S. amounted to $8.73 billion in 2024, representing nearly 31% of the sector’s total exports. Industry leaders have cautioned that imposing tariffs would strain bilateral trade relations and disrupt the affordability and accessibility of essential medicines.
The IPA stressed that the U.S. healthcare system depends significantly on low-cost generic medicines from India. They contend that any tariffs would worsen current shortages of life-saving medicines and drive up the cost of healthcare for millions of Americans.
While the American administration has framed the tariff action as an exercise to stimulate manufacturing at home, analysts think it could have deleterious side effects, such as supply chain disruptions and tit-for-tat trade measures from India.
With the talks to be conducted between trade officials of the two countries, the world pharma industry is watching carefully, given that policy shifts could have far-reaching effects on drug prices and access across the globe.
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