US President Donald Trump’s decision to impose a 100 percent import tariff on branded and patented pharmaceutical products from October 1, 2025, may be a mixed bag for India’s Contract Research, Development, and Manufacturing Organisation (CRDMO) sector.
India’s pharmaceutical exports to the U.S. stood at $8.73 billion in 2024, accounting for 31 percent of total pharma exports. However, the bulk of these exports are generic drugs, which remain exempt from the new tariff. This offers a temporary cushion to Indian drugmakers, but the long-term impact on the CRDMO sector could be more complex.
“Few Indian pharma companies with exposure to non-U.S. domiciled branded formulation or innovator drug companies, who in turn export to the U.S., may face challenges,” said Deepak Jotwani, VP & Sector Head, ICRA.
The BCG-IPSO whitepaper “Unleashing the Tiger” highlights India’s growing CRDMO sector, currently valued at $3–3.5 billion, with ambitions to scale to $22–25 billion by 2035.
The sector is riding high on global supply chain realignment, pricing pressures, and rising demand for new modalities like biologics and cell therapies.
However, Trump’s tariff announcement introduces a new layer of uncertainty. While generics are spared, ambiguity remains around complex generics, specialty medicines, and biologics, segments where Indian CRDMOs are increasingly active. If these are eventually included under the tariff umbrella, Indian firms engaged in R&D and manufacturing for U.S.-bound branded drugs could face headwinds.
India’s CRDMOs often serve as contract developers and manufacturers for global pharma giants. If these clients are hit by tariffs, the ripple effect could squeeze margins for Indian CDMOs, especially those involved in high-volume, low-margin production. The Trump administration’s Section 232 investigation into pharma imports, covering APIs, intermediates, and finished drugs, adds further uncertainty, with a final decision expected by March 2026.
Despite the risks, the tariff could also accelerate the shift toward cost-effective alternatives, benefiting India’s generics and CRDMO segments in the short term. The BCG-IPSO report notes that India’s CRDMOs enjoy a 70–80% workforce cost advantage and 85% lower infrastructure setup costs compared to the West. With faster project startup times and improved IP regimes, India remains a preferred outsourcing destination.
Moreover, companies with US manufacturing facilities under construction are exempt from the tariff, offering a strategic path to mitigate exposure. Several Indian CRDMOs are already expanding footprints in the US, UK, and Europe, positioning themselves as global partners. Syngene International, Cohance are two CRDMOs that have recently acquired facilities in the US. Piramal Pharma, which has facilities both in US and India, offers more flexibility to its customers.
But analysts say that the Indian CRDMO industry has to invest on talent, accelerate innovation in biologics and new modalities, diversify markets beyond the US and strengthen local supplier ecosystems to reduce dependency on China and the West.
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