In a big relief for Indian drugmakers, US President Donald Trump has left pharmaceuticals out of his reciprocal tariff plan he announced early on April 3, even as he levied a 26 percent tariff on other imports from India.
Trump’s executive order did announce a new levy on pharmaceuticals, which are among the categories of products exempted from the broader 10 percent general tariff on all imports.
"It's a good thing," Sudarshan Jain, secretary general, the Indian Pharmaceutical Alliance (IPA), told Moneycontrol. "The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security," Jain added.
IPA represents large homegrown pharmaceutical companies that have significant exposure to the US market.
The exemption applies broadly to all pharmaceutical products, ensuring that the drugmakers avoid immediate cost pressures.
The exemption is positive for companies such as Sun Pharma, Dr Reddy's, Zydus Lifesciences, Aurobindo Pharma, Lupin and Biocon, who get significant revenue share from US.
The spectre of tariffs, however, is not fully gone, as Trump has previously warned that he may review the policy at a later stage.
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"The exemption of pharmaceuticals is pragmatic decision by the Trump administration. It is also reaffirmation that India is a trusted partner when it comes to supplier of quality and affordable pharmaceuticals, saving hundreds of billions to US patients," K Raja Bhanu, director general of the Pharmaceuticals Export Promotion Council of India (Pharmexcil) said.
Pharmexcil is an agency under the department of commerce for the promotion of pharmaceutical exports.
The US is the biggest market for Indian generics. In 2024, India exported drugs worth around $8.73 billion to the US — about 31 percent of its total pharma exports.
Over 90 percent of all US prescriptions were for generic medicines. Four out of every 10 prescriptions filled in the US were for drugs manufactured by Indian firms.
Indian generics saved the US healthcare system $219 billion in 2022 and $1.3 trillion between 2013 and 2022, according to analytics firm IQVIA.
Indian drugmakers provide nearly half of the generic medicines covered by US federal medical insurance Medicare and commercial insurance plans.
Moneycontrol wrote how Indian drugmakers were worried about Trump’s tariffs. They have been weighing portfolio rejig, and manufacturing realignment to survive US tariffs, as they typically operate on thin EBITDA margins of 5-15 percent on average for their base business. Even a 10 percent reciprocal tariff would have made them unviable if they fail to pass on the increased import duty to the consumers in the US.
While Trump had been flagging pharma tariffs, Moneycontrol wrote that he faced dilemma, as distributors, generic pharmaceutical manufacturers, hospitals, patient groups lobbied against levies on essential drugs, raising concerns about medical inflation, supply-chain disruptions and potential shortages.
The US President unveiled global reciprocal tariffs at an event at the White House early on April 3 (IST). He held up a chart as he addressed media, showing the United States would impose a 26 percent levy on Indian imports.
The tit-for-tat tariffs will come into effect from April 9, the White House said in a statement.
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