What Trump’s 100% tariff on branded drugs means for India
Continuing his policy of imposing tariffs on imports, US President Donald Trump on Thursday announced 100% duties on branded drugs from 1 October. The move is unlikely to impact India, as the country is a major player in generic medicines and vaccines. Nevertheless, the decision has caused jitters.
According to a report by Brickwork Research, innovator or branded drugs make up only about 3-4% of India’s formulation market. It is the branded generic products that take the lion’s share. This trend has been consistent over the years.
Innovator drugs, or branded drugs, are developed through extensive research and are protected by patents. Branded generics refer to medications that contain the same active ingredients as innovator drugs but are marketed under a different brand name without patent protection.
While Trump’s latest decision does not impact India much, the fast-changing tariff policies of the US are enough to induce uncertainty and nervousness in the Indian sectors that have high exposure to the world’s largest economy in the world.
The US’s share of India’s exports of drugs, pharmaceuticals, and fine chemicals has more than doubled in the past twenty years. Currently, the US accounts for a third of total such exports, making India vulnerable to changes in policies.
Stocks drag
Even as India has largely dodged tariffs, stocks of key pharmaceutical companies have reacted negatively to the news, with prices declining up to 3.4%. Companies like Aurobindo Pharma, Dr Reddy’s Laboratories, Zydus Lifesciences, Lupin, Sun Pharmaceutical Industries, and Cipla, among others, get 10-47% of their profits from the US market.
Trump had exempted pharmaceutical products from the Liberation Day tariffs on 2 April. However, despite the exemption, Nifty Pharma has underperformed compared to the benchmark Nifty 50 since 2 April 2025, signalling the worries over tariff-related uncertainty and India’s high exposure to the US market.
In a report last month, India Ratings and Research had noted the risks associated with the fast-changing tariff policies of the US, but also said India’s importance in the US drug market may also shield it from the tariffs. The price gap between generic and patented products in the US is typically about 95%, making India’s generic products cost-effective.
“The US heavily relies on Indian generics due to their low-cost, high-volume nature, making it challenging to replace them with higher-cost local production,” the report noted.
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