'Completely out of scope': Experts weigh in on proposed US tariffs on generic drugs

Proposed U.S. tariffs on generic drugs are considered "out of scope" by industry experts, who argue that the timeline for implementing such measures is unrealistic. U.S. President Donald Trump announced plans for zero tariffs for two years, escalating to 100% in the third year and 200% from the fourth year, aiming to incentivize the relocation of pharmaceutical production back to the United States.

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The announcement made by Trump is that there will be zero tariff for two years. 100% in the third year and 200% from the fourth year. As per our thinking, it does not seem that it will be possible so soon. Because it takes a minimum of 4-5 years to create any pharmaceutical generic ecosystem. So, if you impose a tariff in two years without creating the ecosystem, then this possibility seems very low...the Indian industry does not have that much scope and margin.

Namit Joshi, Chairman of Pharmexcil, explained that creating a pharmaceutical generic ecosystem takes at least four to five years. Imposing tariffs before such an ecosystem is established makes the proposal difficult to execute. Indian companies, he noted, operate on very thin margins in the U.S. market and would struggle to absorb the tariffs, likely leading them to transfer costs to consumers or exit the market.

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Right now we are operating on a very thin margin. We will have a limitation that we will not be able to absorb this tariff. We can only transfer that tariff. Or we can withdraw from the market...if it was 10 years ago, it would have been fine, but right now the operating margin in the US is very low...the entire industry says that 200% is completely out of scope and even 100% is very difficult for them to absorb for any pharmaceutical manufacturer.

Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), emphasized India's role as a trusted partner in supplying affordable medicines to American patients. He highlighted that leading Indian pharmaceutical companies have established over 40 facilities in the U.S., supporting American jobs and investing in manufacturing. The IPA intends to continue engaging with the U.S. administration to foster a stronger partnership and enhance health and medicine security for both nations.

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India has been a trusted partner in ensuring the supply of affordable and quality-assured medicines for American patients. Leading Indian pharmaceutical companies have US presence (over 40 facilities), supporting American jobs, investing in manufacturing, research and resilient supply chain. IPA will continue to engage with the US Administration to build a stronger partnership and further strengthen health and medicine security for both countries.

Nikkhil K Masurkar, CEO of Entod Pharmaceuticals, suggested that India should aim to become the healthcare leader for the Global South, rather than relying heavily on a single export market. He pointed out that over one-third of India's pharmaceutical exports depend on the U.S., indicating a need for diversification. The proposed tariffs, which are set to increase from August 2028, add another layer of complexity for manufacturers, many of whom already have U.S.-based production facilities.

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If over one-third of our pharmaceutical exports depend on a single country, we're not truly the Pharmacy of the World. India's next ambition should be to become the healthcare leader of the Global South.