Trump's 100% tariff on branded drugs: Exporters assessing impact on complex generics

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US President Donald Trump’s latest tariff order imposing a 100 percent levy on branded or patented pharmaceuticals is unlikely to dent India’s drug exports, which primarily comprises of generics or off-patent medicines. However, the impact on complex generics and specialty medicines is still being reviewed, government officials and industry experts have told Moneycontrol.

Pharmexcil, the government-authorised pharma export association said the latest tariffs are unlikely to have an immediate impact on India’s exports.

“The bulk of our contribution lies in simple generics and most large Indian companies already operate US manufacturing or repackaging units and are exploring further acquisitions,” Namit Joshi, chairman, Pharmaceutical Export Promotion Council of India (Pharmexcil) said.

While generic drugs are exempted, companies still face uncertainty over tariffs due to an investigation order by the US government under Section 232 to see whether pharma imports pose a threat to national security.

“Nonetheless, it is prudent to remain prepared for future policy shifts and to build risk-mitigation strategies,” Joshi added, and said the association will continue to engage with stakeholders to ensure uninterrupted supply of affordable, quality medicines.

“Prima facie, the impact (of tariffs) on Indian drug industry seems minimal, but the government is examining the matter. All aspects have to be covered as some have raised concerns about certain complex generic drugs,” said one government official requesting anonymity.

The Ministry of Commerce and Industry is yet to issue an official statement on the latest tariffs.

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US President Donald Trump had on September 26 announced a 100 percent tariff on imports of branded or patented pharmaceutical products, starting October 1, unless a company is setting up a manufacturing plant in America.

Maitri Sheth, Institutional Analyst at Choice Institutional Equities said that the tariff are primarily targetting branded drugs, but there is ambiguity over whether complex generics and specialty medicines will be affected or not, which could pose challenges for companies relying on US exports. “…firms with manufacturing plants under construction in the US will be exempt, offering an opportunity to mitigate tariff exposure,” she added.

Pharmexcil underscored that India has been a cornerstone in the global supply chain for affordable, high-quality medicines, meeting nearly 47 percent of US’ generic pharmaceutical requirement.

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“Indian pharmaceutical companies continue to ensure the affordability and availability of essential medications — from life-saving oncology drugs and antibiotics to chronic disease treatments — helping stabilise global healthcare systems,” Namit Joshi said.

Patented drugs are new, unique medicines developed by a company and are often very expensive. Generic drugs, on the other hand, are low-cost versions of these medicines that can be produced once the original patent has expired.