India’s pharmaceutical industry is forming a multi-pronged strategy to shield itself from potential tariff shocks as US President Donald Trump escalates his trade offensive.
The industry is not taking chances while drug formulations and active pharmaceutical ingredients (APIs) remain exempt from the latest 25 percent additional tariff hike under the ongoing Section 232 investigation.
“The recent executive order by the US Administration excludes the pharmaceutical sector from immediate tariff imposition,” said Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance. “Generic medicines are important for affordable healthcare in the US and typically operate on razor-thin margins,” he said.
The exemption, however, is temporary. The Section 232 probe—launched by the US Department of Commerce to assess whether pharma imports threaten national security—is expected to conclude by December 27, 2025, with a presidential decision due by March 2026.
Strategic moves
Indian drugmakers are responding with a mix of geographic diversification, supply chain resilience, acquisition of US assets, and are also tapping consultants to brace for a potential disruption despite the current exemption.
For instance, Aurobindo Pharma recently acquired US-based Lannett Company for $250 million, while Syngene International picked up its first US biologics facility for $36.5 million. All these acquisitions are to meant to gain manufacturing foothold in the US, and probably get some shield from tariffs.
Others like Natco Pharma, with a lion's share of revenues from the US, are diversifying. Last month, it acquired a 35.75 percent stake in Adcock Ingram Holdings Ltd, a South African pharmaceutical company, for approximately Rs 2,000 crore. This acquisition aims to expand Natco Pharma's footprint in the African market
“Clearly, we want to diversify,” said Rajeev Nannapaneni, Vice Chairman and CEO of Natco Pharma. “We want to have a good geographical spread and strengthen our core business.”
Alembic Pharmaceuticals, which derives over 30 percent of its revenue from the US, is pursuing backward integration, cost optimisation, and selective acquisitions. “There’s no playbook for this. We’re doing it ourselves—sourcing more from India, improving conversion costs, and building (supply chain) resilience,” said Managing Director Pranav Amin.
Companies which don't have manufacturing footprint in the US, are looking at outsourcing to contract manufacturers in the US, like Senores Pharmaceuticals, which manufactures entirely in the US. The company says it remains insulated from tariff risks.
Manufacturing in the US does comes with a cost, which would be difficult for generic companies that operate on 10-15 percent margins.
Consultants step in
Global consulting firms like Oliver Wyman are helping Indian pharma clients scenario-plan for tariff shocks. “Risk management is at the heart of what we do,” said Sumit Sharma, Partner and Head of Health & Life Sciences – IMEA, Oliver Wyman,
“Clients are asking us to come up with responses, so that they have a playbook ready,” Sharma said.
Dr. Chirag Adatia, Partner – Health and Life Sciences and Private Capital Practices, Oliver Wyman
said some of the strategies include China+1 sourcing strategies, digital analytics to improve plant throughput and yield operational cost-cutting, M&A targeting for growth and diversification.
The Association for Accessible Medicines (AAM), which represents the US generic and biosimilar manufacturers, has warned that tariffs on generics would raise prices, worsen drug shortages, and threaten the viability of low-margin products. In 2023, generics accounted for 90 percent of US prescriptions and saved the healthcare system $445 billion.
“Tariffs on generic medicines would significantly increase prescription drug prices,” AAM said in a recent fact sheet. “They would trigger unprecedented shortages and discourage onshoring.”
India exported pharmaceuticals worth $8.73 billion to the US in 2024, accounting for 31 percent of its total pharma exports. Indian generics make up nearly half of all drugs covered by Medicare and commercial insurance plans.
For now, the industry is watching Washington closely—hoping that economic logic and healthcare realities will outweigh protectionist impulses.
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