Key Points
- US President Donald Trump has announced a 100% tariff on imported branded and patented pharmaceutical products, effective October 1, 2025.
- The tariff will be waived for foreign companies that are actively building manufacturing plants in the United States.
- The move has sent shockwaves through the Indian pharmaceutical sector, which counts the US as its largest export market, with annual exports valued at over $12 billion.
- Indian pharma stocks fell sharply following the announcement, with the Nifty Pharma index dropping and major companies like Sun Pharma and Cipla seeing significant declines.
- India’s government has stated it is “closely monitoring” the situation and examining the potential impact of the tariffs.
New Delhi: In a major protectionist move, US President Donald Trump announced a sweeping 100% tariff on all imported branded and patented pharmaceutical drugs, set to take effect on October 1, 2025. The announcement, made via the Truth Social platform, is part of his “America First” agenda aimed at boosting domestic manufacturing. The policy has immediately rattled the Indian pharmaceutical industry, a key supplier to the US market, and triggered a sharp sell-off in pharma stocks.
Details of the “America First” Pharma Policy
President Trump stated the tariff is designed to compel global pharmaceutical companies to relocate their manufacturing to the United States. He clarified a significant exemption: the 100% tariff will not apply to any company that is actively building a manufacturing facility in America, defined as having “broken ground” or being “under construction”. The stated goal is to secure the nation’s drug supply chain and reduce reliance on foreign production.
Impact on India’s “Pharmacy of the World”
The United States is the single largest market for the Indian pharmaceutical industry, accounting for approximately 30-35% of its total exports. In 2023, the US imported pharmaceuticals worth $158 billion, with India being a major supplier of both generic and branded drugs.
While the immediate tariff targets “branded and patented” products, the ambiguity in the definition has created uncertainty. The Indian government and industry experts are assessing the potential impact, especially if the scope is later widened to include complex or branded generics. Opposition leaders in India have voiced strong concerns, with Congress leader Udit Raj warning the move could cause Indian medicine manufacturers to “collapse” and questioning the Modi government’s silence.
Market Turmoil and Official Response
The announcement had an immediate and negative impact on the Indian stock market. The Nifty Pharma index saw a significant drop, with shares of major exporters like Sun Pharma, Cipla, and Dr. Reddy’s Laboratories falling by as much as 4%. The ripple effects were also felt globally, with stocks of major pharmaceutical companies like Johnson & Johnson and Eli Lilly experiencing volatility.
In its first official response, India’s Ministry of External Affairs stated that the relevant ministries are “closely monitoring the matter and examining its impact”. While many large Indian pharma companies like Sun Pharma and Dr. Reddy’s already operate manufacturing plants in the US, potentially shielding them from the initial blow, the broader strategic shift in US trade policy remains a significant long-term challenge for the sector.
