The US has announced a phased tariff plan for imported generic drugs, starting with a two-year duty-free window. Indian pharmaceutical exporters now have until mid-2028 to adjust their manufacturing strategies before tariffs increase to 100% and eventually 200%.
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The United States government has released a new tariff roadmap for imported generic medicines, creating a significant shift in the trade landscape for Indian pharmaceutical companies. Under the plan, generic drugs will remain duty-free for the next two years, ending in July 2028. Following this period, imports will face a 100% tariff for one year, which is set to rise to 200% thereafter.
This policy is part of a broader push to encourage companies to move their manufacturing facilities inside the United States. While the immediate impact on exports is limited, the long-term structure of the pharmaceutical trade between the two nations faces a major change. Currently, the US accounts for approximately 34% of India’s total pharmaceutical exports, which reached $30.47 billion in the 2024-25 fiscal year.
Companies that already have established manufacturing sites in the US may have more flexibility to adjust their operations. Manufacturers like Dr. Reddy’s Laboratories, Aurobindo Pharma, Cipla, Lupin, and Zydus Lifesciences have built significant footprints in the US market over the years, which could help them manage the transition. For companies with a higher concentration of production based in India, such as Alkem Laboratories and Torrent Pharmaceuticals, the two-year window provides a necessary timeframe to weigh options like expanding US production or entering contract manufacturing partnerships to maintain their competitive position.
Since generic drugs account for over 90% of prescriptions in the US, the reliance on affordable imports is high. However, the move toward higher tariffs is intended to rebuild domestic drug production capacity. For Indian firms, the main challenge lies in the potential impact on profit margins if they are forced to shift production to high-cost regions or face prohibitive import taxes. Investors will be tracking how these companies adjust their capital spending and supply chain strategies in the coming quarters. The next critical update will be the formal filing of these rules and any subsequent guidance from the companies on their long-term manufacturing and distribution plans for the US market.