Trump’s crackdown on high drug costs: Why India’s pharma industry could emerge as the big winner | Explained

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The United States has announced a new plan to accelerate the approval of certain generic and biosimilar drugs. The move, aimed at cutting high prescription costs for American consumers, could turn into a major advantage for India, the world’s leading producer of affordable medicines.

For Indian pharmaceutical companies that already supply nearly half of all generic medicines sold in the US, the decision signals faster market access and potentially higher export volumes.

FDA’s new plan to lower drug prices

The US Food and Drug Administration (FDA) on Wednesday said it will streamline the process for approving generic versions of complex drugs, including biologics. The goal is to increase competition and bring down the cost of expensive branded medicines that treat serious illnesses such as cancer and autoimmune diseases.

Biologics are derived from living cells and are far more complex than traditional chemical drugs. Their generic counterparts, known as biosimilars, are not identical copies but are designed to work in the same way. The FDA said it will now allow companies to sell some biosimilars without lengthy comparative studies, provided the two medicines are “made from clonal cell lines, are highly purified and can be well-characterised analytically.”

The agency said this change could reduce the cost and time required for biosimilar development. However, it noted that such comparative studies will still be necessary in some cases.

FDA Commissioner Marty Makary said the reforms “will take the five-to-eight-year timeframe to bring a biosimilar to market and cut it in half.”

Why US wants more biosimilars

While biologics make up only 5 per cent of prescriptions in the US, they account for more than half of total drug spending. The FDA has so far approved only a few dozen biosimilars, and despite their proven safety and effectiveness, they represent less than 20 per cent of the market.

Health Secretary Robert F Kennedy explained that under the new rules, “companies may not always need to conduct large, expensive human trials when advanced testing can already prove that biosimilars work just as effectively and just as safely as the original drug.”

Kennedy said biosimilars generally cost half as much as biologics, and their introduction has also driven down the price of branded medicines by as much as 25 per cent. He said biosimilars saved the US $20 billion (Rs 1.77 lakh crore) in 2024 alone.

He accused major pharmaceutical companies of blocking biosimilar competition through lobbying and litigation. “The lobby invented a fake distinction between biosimilars and interchangeable biosimilars,” Kennedy said, calling the move a deliberate effort to protect monopolies.

A spokesperson for the Department of Health and Human Services reminded drug companies that biologic medications already enjoy 12 years of exclusivity under US law. “No manufacturer should anticipate a monopoly or anything else beyond what is legally granted,” the spokesperson said.

A boon for Indian drug makers

For India, the FDA’s shift could translate into a significant economic boost. Indian companies are already the backbone of America’s generic drug supply. The country sends about one-third of its total pharmaceutical exports to the US, amounting to roughly $20 billion annually.

From common drugs for hypertension and diabetes to cancer therapies, Indian generics are a crucial part of the American healthcare system. Lower regulatory hurdles for biosimilars could now open an even larger segment of the market to Indian exporters.

The move also follows a key decision by the Trump administration earlier this year to drop its proposal to impose tariffs on imported generic drugs. Officials within the White House had argued that such tariffs would raise prices and cause shortages, given that India’s low-cost manufacturing keeps American healthcare affordable.

Industry resistance and the road ahead

Big pharmaceutical firms in the US have pushed back strongly against the reforms. Companies such as Eli Lilly, Pfizer, Merck and Bristol Myers Squibb have warned that easier approval for biosimilars could undermine innovation and cut into their profits.

They have also cited challenges such as physician hesitation, complex reimbursement systems and patent disputes that continue to slow biosimilar adoption.

Despite the resistance, the FDA’s latest guidance indicates a firm policy shift. “We’re planting a flag saying we want interchangeability. We promote it, we encourage it,” Commissioner Makary said, adding that final guidance will be issued within six months.

What it means for India

For Indian pharmaceutical exporters, the new US policy could unlock faster access to the high-value biologics market, which has long been dominated by Western drug giants. With Indian firms already experienced in producing cost-effective biosimilars for Europe and developing countries, the US market now presents a major growth opportunity.

The reforms also strengthen the long-standing trade link between New Delhi and Washington in the pharmaceutical sector. As the US looks to curb healthcare costs and reduce dependence on China for raw materials, India’s position as a reliable supplier of affordable and high-quality medicines stands to grow even stronger.