The US Food and Drug Administration (FDA) has launched a new pilot programme to fast-track abbreviated new drug applications (ANDAs) of generic drugs for companies that make and test them entirely within the United States, in an effort to bring pharmaceutical production to American soil and reduce reliance on foreign suppliers, particularly from India and China.
US President Donald Trump has been pushing pharmaceutical companies to onshore manufacturing through trade tariffs, investigations and regulatory levers. The Indian generic companies which sell affordable generic versions of the medicines into US were so far exempted from tariffs, but Trump has not offered any further clarity.
Under the pilot, ANDA applicants who will compare generic and branded drug formulations in the US to establish equivalence, manufacture finished dosage forms domestically and source active pharmaceutical ingredients (APIs) from US-based suppliers will be eligible for faster USFDA reviews.
The agency said the initiative aims to “spur and reward investment in US drug manufacturing and R&D” as well as strengthen the domestic supply chain.
The USFDA’s Manual of Policies and Procedures has outlined the criteria for priority review which now includes this new “onshoring” incentive. While the pilot does not guarantee a shorter timeline to market, it offers expedited review pathways for qualifying submissions.
Impact on Indian Drugmakers
India, which supplies over 44% of APIs used in US medicines and accounts for 34.5% of US generic drug imports, could see some challenge if this pilot gains traction. A top executive of an Indian pharma company that exports generics told Moneycontrol that the shifting of testing and manufacturing to the US to take advantage of a priority review wouldn't be easy.
"It adds to costs and further erodes whatever thin margins we make," the executive said.
During FY25, India’s pharmaceutical exports touched $30.5 billion, with US alone absorbing $8.72 billion worth of medicines. India houses the largest number of FDA-approved manufacturing plants outside the US, and companies like Dr Reddy’s, Sun Pharma, and Aurobindo Pharma derive over 45% of their revenue from the US market.
Indian generics now make up 42% of all prescription drugs in the US, up from 21% in 2013. This meteoric rise has been fuelled by cost advantages, better regulatory compliance and a robust pipeline of complex generics and biosimilars, or copies of biologic drugs that are highly similar.
While the USFDA’s pilot is designed to bolster domestic manufacturing, industry experts said the criteria may be difficult to meet.
"Only 9% of API manufacturers are currently based in the US, and bioequivalence testing is often outsourced to lower-cost CROs abroad," regulatory expert Robert Pollock of Lachman Consultants wrote in a recent blogpost. "Most foreign APIs are much less expensive than those available in the US, if they are available at all. Also in vivo bioequivalence testing can, in some instances, cost less than half the cost associated with using a US CRO," he added.
Still, for Indian drugmakers, the FDA pilot could mean longer review timelines if US-based competitors gain priority status. However, analysts argue that the cost differential - 60-80% lower manufacturing costs in India - still gives Indian companies a competitive edge.
Moreover, the pilot may push Indian firms to invest in US-based facilities, a trend already underway. Companies like Aurobindo Pharma, Sun Pharma, Cipla, Lupin, Gland Pharma and Biocon have expanded their US footprint through acquisitions and partnerships, targeting complex generics and specialty drugs.
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