Donald Trump takes big step as US president announces 200 percent tariff on generic drugs: What will be impact on Indian pharma companies?
The move is expected to pose a significant long-term challenge for foreign pharmaceutical export hubs, particularly India. Indian drug manufacturers currently supply around 40% of the generic medicines used in the United States
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New Delhi: In a significant development, US President Donald Trump on Tuesday announced a phased tariff on imported generic medicines amid the ongoing tensions between the United States and Iran. The president said that the generic drugs will continue to enter the United States duty-free for the next two years, after which steep tariffs will be imposed to encourage pharmaceutical manufacturing to return to the country.
Donald Trump said the move is aimed at boosting domestic production of generic medicines. In a post on his Truth Social platform, he said, "Starting August 1, 2026, all generic medicines imported into the United States will be subject to a 0% tariff for two years. After that, the tariff will increase to 100% for one year, and then rise to 200%."
Announcing the policy, Trump said its primary objective is to encourage pharmaceutical companies to manufacture generic medicines within the United States. "This is being done to bring generic drug manufacturing back to America. Companies that fail to establish manufacturing plants and install the necessary equipment within the specified timeframe will face penalties. The purpose of this policy is to protect the American people."
President Trump also said that there will be no changes to the policy governing patented, branded, or innovative medicines, saying the existing framework has been successful. He further claimed that pharmaceutical manufacturing facilities are being built across the United States on an unprecedented scale.
To recall, major pharmaceutical companies reached agreements with the US government under which billions of dollars' worth of medicines were exempted from tariffs. At the same time, President Donald Trump imposed tariffs on imported branded medicines unless manufacturers agreed to pricing-related deals or committed to producing those drugs in the United States.
What Will Be the Impact on India?
According to US President Donald Trump, the phased tariff framework is specifically designed to give international drug manufacturers an ultimatum. The investment in pharmaceutical manufacturing infrastructure in the United States or face steep financial penalties.
The move is expected to pose a significant long-term challenge for foreign pharmaceutical export hubs, particularly India. Indian drug manufacturers currently supply around 40% of the generic medicines used in the United States.
India is often referred to as the "pharmacy of the world" because it has more than 3,000 US FDA-approved manufacturing facilities.
Highlighting India's role in the global pharmaceutical industry, Union Health Secretary Punya Salila Srivastava said at the USISPF India Leadership Summit held in New Delhi in October 2024, "The strength of the Indian pharmaceutical industry is reflected in the fact that India has the highest number of US FDA-approved pharmaceutical manufacturing plants outside the United States. These account for about 25 percent of all US FDA-approved facilities located outside the US."
She further noted that Indian generic medicines saved the US healthcare system an estimated $219 billion in 2022 alone, while generating total savings of approximately $1.3 trillion between 2013 and 2022.
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